East India Securitie's report on Nitin Spinners
Nitin Spinners Ltd (Nitin) came out with an excellent set of numbers, way above estimates for Q3FY21 as business operations got support from firm demand recovery with strong yarn prices. Supported by a well-diversified geographical reach the company registered a sales growth of 16% YoY to Rs4,668 Mn on account of 2.3%, 28.6% & 149.7% growth in Yarn, Knitted Fabrics & Woven Fabrics segment respectively. With benign cotton prices, gross margin of overall business improved by 721 bps YoY because of higher spreads and contributions from the new woven fabric division. EBITDA grew by 75.5% YoY to Rs741 Mn, with 538 bps margin expansion. Nitin is set to continue hitting ~95%-100% capacity utilization in coming quarters. Given yarn prices are still firmed up, margin performance should be strong coming quarters.
Outlook
We continue to maintain our BUY rating on the stock of the company with a target price of Rs152 per share, 8.5xFY23e EPS.
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