Summary
Nitin Spinners Limited - Q3 FY26 Earnings Call Summary Tuesday, February 03, 2026 04:00 PM
Event Participants
Executives 3 Dinesh Nolkha (CMD), Nitin Nolakha (MD), P. Maheshwari (CFO)
Analysts 8 Aditya (UK Capital), Awanish Chandra (SMIFS Limited), Madhur Rathi (Counter Cyclical Investments), Priyam Shrivastava (KC Capital), Resham Jain (VVD Asset Managers), Rina Kashyap (Individual Investor), Sanjay Shah (ASK Securities), Yash Tawani (Aamara Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹800.68 crores | +5.3% QoQ / -4.5% YoY; Growth driven by stable demand and volumes, offset by reduced selling prices YoY. |
| EBITDA | ₹111.54 crores | +12.0% QoQ / -4.8% YoY; Current quarter margins improved to 13.93% from 13.10% in Q2 FY26. |
| Profit After Tax (PAT) | ₹44.41 crores | +27.7% QoQ / -0.8% YoY; Significant sequential recovery despite global trade uncertainties. |
| EPS | ₹7.90 | Cumulative 9M FY26 EPS stands at ₹21.38 per share. |
| Cash EPS | ₹14.53 | Cumulative 9M FY26 Cash EPS stands at ₹41.19 per share. |
| Spinning Utilization | 99% | Operating at near-optimum capacity; management noted 42-43m spindles operational industry-wide. |
| Woven Fabric Utilization | 91% | Strong operational performance; capacity set for expansion in H2 FY27. |
| Knitting Utilization | 40% | Significantly impacted by U.S. tariffs and global trade headwinds; previously at higher levels. |
| Export Mix | 61% | Domestic market contributes remaining 39%; focus shifting to EU following FTA developments. |
Geographic & Segment Commentary
- Export Markets: Exports contributed 61% of revenue, with a strong foothold in the EU as a leading cotton yarn exporter. Management anticipates significant growth from the EU FTA and U.K. trade deals, and a recovery in the U.S. market following recent tariff reductions.
- Woven & Processed Fabrics: This segment currently generates ₹130 crores in quarterly revenue and is the primary focus of the ₹1,120 crore expansion. Management aims to double capacity to 35 million meters, transitioning the product mix from 65:35 bottom-weights to a 50:50 ratio including yarn-dyed fabrics.
- Knitted Fabrics: Revenue stood at ₹30 crores for the quarter, down from previous years due to high U.S. market exposure (3-4% direct, 7-10% indirect). Utilization remains low at 40%, with management planning to regain market share cautiously without increasing specific capacity.
Company-Specific & Strategic Commentary
- Renewable Energy Expansion: Approved ₹230 crore capex for 41.1 MW AC captive solar power (60 MW DC) with 38 MWh battery backup. This initiative aims to mitigate Rajasthan power hikes, covering 40-45% of total consumption and saving ₹51 crore annually by Q2 FY27.
- Integrated Capacity Expansion: The ₹1,120 crore project (₹600 crore ex-spinning) includes weaving, processing, yarn dyeing, printing, and finishing. This integration is expected to enhance overall EBITDA margins by 100-150 bps due to higher value addition.
- Operational Modernization: Commissioned balancing equipment and a 4.6 MW solar plant in Q3; an 18 MW hybrid power agreement is expected to be fully operational by Q1 FY27.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Fabric Capacity Timeline | Commissioning June-July 2026 | Production expected from Oct-Nov 2026; targeting 80% utilization by FY28. |
| Spinning Capacity Timeline | November-December 2026 | Final phase of the current expansion cycle to be ready by end of calendar year 2026. |
| Revenue (New Capacity) | ₹1,000 crores increment | Approximately ₹650-700 crore from fabrics and ₹300-350 crore from yarn and yarn-dyeing. |
| EBITDA Margin | +100 to 150 bps improvement | Derived from higher value addition in the woven and finishing segments post-expansion. |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Volatility | Following the removal of import duty exemptions, domestic cotton trades at a premium to international prices. Management relies on advanced licenses for duty-free imports to maintain export competitiveness. |
| Geographic Concentration | High historical dependence on the U.S. market for knitted fabrics led to underutilization (40%) during tariff disputes. Management is now diversifying toward the EU and U.K. to mitigate single-market risk. |
| Global Trade Uncertainties | Persistent headwinds from U.S. tariffs and shipping disruptions impacted H1 FY26 margins. While recovering, the industry remains sensitive to the implementation speed of Free Trade Agreements (FTAs). |
Q&A Highlights
Tariff Reductions & U.S. Demand
- Question: How will the U.S. tariff reduction impact revenue and the knitting segment? (Rina Kashyap)
- Answer: Direct U.S. exposure was 3-4% of exports, with another 7-10% indirect. Tariff reductions make Indian products competitive again, and management expects to regain this business shortly, improving utilization and margins (Dinesh Nolkha).
Power Savings & Solar Capex
- Question: What are the specifics of the ₹230 crore solar investment? (Rina Kashyap)
- Answer: It involves 60 MW DC/41 MW AC solar with battery storage. Total annual generation will reach 21 crore units, meeting 45% of total power needs and saving ₹51 crore annually (Dinesh Nolkha).
Fabric Segment Strategy
- Question: What is the margin differential between yarn and finished fabrics? (Sanjay Shah)
- Answer: Finished woven fabrics are more profitable due to integration. The new capacity mix is expected to lift corporate EBITDA margins by 100-150 bps (Dinesh Nolkha).
Cotton Market Dynamics
- Question: Are domestic cotton prices trading at a premium to international markets? (Madhur Rathi)
- Answer: Yes, with the 11% duty back in place, domestic prices are higher. However, for exports under advanced licenses (6-7% cost implication), Indian cotton remains competitive (Dinesh Nolkha).
Garmenting & Future Expansion
- Question: Do you have plans to enter the garmenting business given the new FTAs? (Vishal Prasad)
- Answer: No definitive plans currently. The immediate focus is stabilizing the doubled fabric capacity. While the “Samarth 2.0” scheme helps with labor skilling, garmenting is a long-term consideration (Dinesh Nolkha).
Key Takeaway
Nitin Spinners reported a resilient Q3 FY26 with revenues of ₹800.68 crores, marking a 5.3% sequential recovery despite a 4.5% YoY decline caused by lower realizations. The company maintained high utilization in spinning (99%) and weaving (91%), though the knitting segment (40%) suffered from U.S. trade headwinds. Strategically, the firm is aggressively pivoting toward value-added woven fabrics through a ₹1,120 crore expansion and securing its cost base via a ₹230 crore captive solar project aimed at meeting 45% of power needs. Management expects the EU FTA and U.S. tariff reductions to serve as major catalysts for volume growth and a 100-150 bps margin expansion. With the new fabric capacity set to commission in H2 FY27, Nitin Spinners is positioning itself to capture higher-margin branded and export business as global demand stabilizes.
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