East India Securities research report on Nitin Spinners LtdOverviewNitin Spinners Ltd. (NSL), is a Rajasthan based manufacturer of 100% cotton yarn and knitted fabrics. The company was incorporated in 1992 and commenced production in 1993 with a small open-end facility and since then it has become one of the leading cotton yarn producers in India. Nitin has an installed capacity of 150,096 spindles, 2,936 rotors and 49 knitting machines, which can produce 37,800 tonnes of cotton yarn and 8,600 tonnes of knitted fabric per annum. The company’s sales, EBITDA and adjusted PAT have grown at a CAGR of 13.3%, 12.6% and 16.4% respectively during FY11-FY16. During FY16, the company’s total revenues stood at Rs 7,669 Mn (Cotton yarn – 77%, knitting – 19%, other sources such as trading, waste and job works – 4%). Nitin generated 69% of its revenues from exports and enjoys presence in more than 40 countries across the globe. Domestic revenues contributed 31% and NSL has marquee clients like Arvind, Siyaram, Raymond, D'décor, Donear, etc.
ValuationsNSL is trading at 4.4x FY18E earnings which is very cheap considering the many merits and strengths. We initiate coverage with a buy rating and a TP of Rs 155.
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