Nitin Spinners: ₹1,100 Cr CAPEX Plan Makes This Textile Stock One to Watch
Introduction
Nitin Spinners :, one of India’s leading manufacturers of cotton and blended yarn, knitted fabrics, and woven fabrics, has caught investors’ attention with its ambitious capital expenditure (CAPEX) plan worth ₹1,100 crores. The expansion aims to strengthen its production capabilities, improve margins, and solidify its position in the textile industry.
With a significant investment in spinning, weaving, and renewable energy, Nitin Spinners is gearing up for long-term growth. But is this stock worth adding to your portfolio? Let’s take a closer look at its financials, expansion strategy, and stock performance.
Stock Performance & Market Insights
During Saturday’s trading session, Nitin Spinners’ stock surged nearly 6% to ₹435 on the Bombay Stock Exchange (BSE). Despite recent volatility, the stock has delivered positive returns of 14% in one year. However, the last six months and one month have seen declines of 3.3% and 10%, respectively.
As of today, the stock trades at ₹399, with a market capitalization of ₹2,257 crores. The 52-week high and low stand at ₹494 and ₹293, respectively.
₹1,100 Cr CAPEX Plan: A Game-Changer for Growth
Nitin Spinners is set to invest ₹1,100 crores over the next two years to expand its production capacity. The expansion is aimed at increasing its spinning and weaving capabilities, adding renewable power, and introducing value-added products.
Spinning Capacity Expansion
- Current Capacity: 4.81 lakh spindles (95% utilization rate)
- New Addition: 66,096 spindles
- Total Production Increase: 22,400 MTPA
Woven Fabric Expansion
- Current Capacity: 40 million meters per annum (MMPA) (85% utilization)
- New Addition: 35 MMPA
Renewable Energy Expansion
- Current Renewable Power Capacity: 18.8 MW (AC)
- New Addition: 11.2 MW (AC)
The company plans to fund this CAPEX through a mix of internal accruals and term debt, ensuring financial stability while scaling operations.
Key Growth Drivers & Rationale
1. Product Portfolio Diversification
Nitin Spinners is introducing premium specialty yarns, yarn-dyed fabrics, and special finish fabrics, aiming to capture a larger market share and enter high-end fashion segments.
2. Improved Production Efficiency & Integration
- The company will utilize ~60% of its additional yarn production internally, reducing dependency on external sourcing and improving margins.
- Economies of scale will enhance cost efficiency, leading to higher profitability.
3. Margin Expansion Through Value-Added Products
With an increasing focus on high-end fabrics, Nitin Spinners aims to achieve better margins and sustain profitability in the long run.
4. Government Incentives Under RIPS 2024
The company will benefit from interest subsidies, capital subsidies, and electricity duty exemptions, further strengthening its financial position.
Financial Performance: A Steady Uptrend
Nitin Spinners has consistently reported strong financials, with growth in revenue, net profit, and EBITDA.
| Financial Metric | Q3 FY25 | Q2 FY25 | Q3 FY24 | YoY Growth |
|---|---|---|---|---|
| Revenue | ₹838.8 Cr | ₹822.5 Cr | ₹750.4 Cr | 11.7% |
| Net Profit | ₹44.8 Cr | ₹42 Cr | ₹31.7 Cr | 41% |
| EBITDA | ₹117.2 Cr | – | ₹102.7 Cr | 14% |
| EBITDA Margin | 13.97% | 13.69% | – | +28 bps |
Nitin Spinners’ strong earnings growth and rising margins indicate its ability to navigate market fluctuations while maintaining profitability.
Key Financial Ratios & Valuation
| Metric | Value |
|---|---|
| Market Cap | ₹2,257 Cr |
| Current Price | ₹399 |
| 52-Week High/Low | ₹494 / ₹293 |
| Stock P/E | 13.4 |
| Book Value | ₹217 |
| Dividend Yield | 0.63% |
| ROCE (Return on Capital Employed) | 11.6% |
| ROE (Return on Equity) | 12.1% |
| Debt to Equity Ratio | 0.97 |
| Industry P/E | 21.6 |
| Debt | ₹1,180 Cr |
| PEG Ratio | 0.87 |
| Intrinsic Value | ₹544 |
| Graham Number | ₹382 |
| Piotroski Score | 6.00 |
Valuation Insights
- Stock is trading at a P/E of 13.4, which is lower than the industry average of 21.6, suggesting potential undervaluation.
- Intrinsic value at ₹544 indicates the stock has a potential upside of ~36% from current levels.
- Healthy ROE (12.1%) and ROCE (11.6%) indicate efficient capital utilization.
- Debt-to-equity ratio at 0.97 is reasonable, given the company’s CAPEX plans.
Investment Outlook: Should You Buy Nitin Spinners?
Bull Case (Why to Buy?)
✅ Strong Growth Prospects: ₹1,100 Cr CAPEX to enhance production & efficiency
✅ Product Diversification: Entry into premium & high-margin segments
✅ Government Incentives: Benefits from RIPS 2024 to reduce costs
✅ Valuation Upside: Potential for re-rating with higher margins
Bear Case (Risks to Consider)
⚠ Short-Term Volatility: Stock has given negative returns in the last six months
⚠ Debt-Financed Expansion: While manageable, higher debt could pressure margins in the near term
⚠ Market Uncertainty: Textile industry is cyclical and depends on global demand
Final Verdict
With a massive ₹1,100 Cr expansion plan, improving financials, and a strong growth outlook, Nitin Spinners is a stock to keep on your radar. While short-term volatility may persist, the long-term potential looks highly promising.
For long-term investors, any dip in price could be a great opportunity to accumulate shares at a discount. Given its undervaluation and growth prospects, Nitin Spinners has the potential to deliver strong returns over the next few years.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.