This article first appeared on GuruFocus .
Release Date: November 02, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Nitin Spinners Ltd ( BOM:532698 ) reported its highest-ever quarterly revenue of INR 985.2 crores in Q2 FY27, a 29.6% YoY growth, marking the third consecutive quarter of record revenue.
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EBITDA grew 76.3% YoY to INR 175.5 crores, with EBITDA margin expanding by 471 basis points to 17.8%, driven by better realizations, cost savings, and higher export share.
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Profit after tax more than doubled to INR 88.7 crores, a 155% YoY increase, reflecting strong operational efficiency and financial performance.
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Export revenue contributed 68% of total revenue, with a 40% YoY increase, supported by improved yarn realizations and stable demand across geographies.
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The company is expanding renewable energy capacity from 41 MW to 95 MW, expected to meet 50-55% of power needs and reduce costs, with commissioning by December 2026.
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Nitin Spinners Ltd ( BOM:532698 ) is progressing on its expansion projects, with trial production commenced and commercial production expected by end of December 2026, targeting an additional INR 1,000 crores in annual revenue.
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The company maintains a strong margin guidance of 16-20% and expects to sustain current levels through cost initiatives and value-added products.
Negative Points
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EBITDA margin on a sequential basis was impacted by one-off expenses related to trial production of new capacity, which resulted in a loss of about INR 1 crore and reduced adjusted margin to 18.5%.
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Input costs are rising, including dyes, chemicals, coal, and packaging, along with increased freight rates, which could pressure margins if not fully passed on to customers.
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Fabric realizations increased only 6% YoY compared to a 12.5-13% rise in yarn realizations, indicating a lag in passing on costs in the fabric segment.
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Knitting fabric utilization has been low due to volatility in yarn prices and concerns over US trade policies, impacting overall capacity utilization in that segment.
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The company's debt is expected to peak at around INR 1,950 crores by March 2026, with annual repayments of INR 180-200 crores over the next six to seven years, which may constrain financial flexibility.
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There is uncertainty regarding the continuation of cotton import duty exemption, which could affect raw material costs and competitiveness if not extended.
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The company has not yet decided on future expansion beyond the current fabric capacity, with no clear timeline for entering garmenting or other value-added segments.
Q & A Highlights
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Q: With Q2 FY27 EBITDA margin at 17.8%, what drove the sequential dip, and what margin can the new fabric capacity deliver once fully ramped in FY28 with renewable energy? A: The Chairman and Managing Director explained that trial production added about INR 21 crores of revenue but posted an EBITDA loss of roughly INR 1 crore, so excluding it the margin was around 18.5%. Post-expansion, 28-30% of yarn capacity will feed woven fabric, and the company expects 16-18% operating margins in normal conditions, with renewable power potentially adding 100 basis points.
Q: What is the commissioning and ramp-up schedule for the expansion, and how much revenue will it add? A: The Chairman and Managing Director said trials have begun across all segments, with commercial production expected by end-December 2026. Spinning and grey fabric should reach 95%+ utilization by March 2027, while finished fabric may take 8-9 months (around August-September 2027) due to marketing and customer development. The new capacity is expected to add about INR 1,000 crores annually from FY28, with roughly INR 300-350 crores in FY27.
Q: How do you view cotton prices and spinning spreads going forward? A: The Chairman and Managing Director noted domestic cotton at around INR 67,000-68,000 per candy and international at about $0.80 per pound, with the spread at roughly INR 125-130 per kg. He expects international prices to average 84-85 cents within a 75-90 cent range, and said margins hold as long as Indian cotton stays at or below international parity, helped by the duty-free import window.
Q: Will the government's cotton import duty exemption continue? A: The Chairman and Managing Director said the industry understands the exemption will continue, given a 4-5% lower cotton crop, consumption growth of 5-6%, and a widening supply gap. He expects the government to keep domestic prices at par with international levels absent major volatility.
Q: What is the debt and repayment picture after the capex? A: The CFO said total term debt will peak at about INR 1,440 crores in March 2027, with working capital rising from about INR 400 crores to over INR 500 crores, taking total debt to roughly INR 1,950 crores. Annual repayments will be about INR 180-200 crores for the next six to seven years.
Q: What is the blended cost of debt, and are you getting interest subsidy? A: The Chairman and Managing Director confirmed an interest subsidy of about 2.5% on average on the capex loans, bringing the blended cost of credit to about 6.5-6.75%.
Q: Can the 18.5% adjusted margin be sustained? A: The Chairman and Managing Director said it is the company's endeavor to stay in the 16-20% bracket, supported by renewable energy, cost initiatives, and value addition. He cautioned that rising input costs (dyes, chemicals, coal, packaging, freight) and the lag in fabric price pass-through must be considered.
Q: What drove the 40% year-on-year export growth, and which geographies contributed? A: The Chairman and Managing Director said growth was broad-based across geographies rather than one region. Yarn realization gains contributed about 20-25%, with the remainder from higher volumes and a shift of capacity toward exports; he does not expect a major profitability impact from this mix.
Q: Is the industry under-investing in spinning capacity, and when will UK and EU FTAs benefit India? A: The Chairman and Managing Director said spinning capacity is already underutilized, with only about 80% in use and 17-18% of industry capacity closed, so no new spinning capacity is needed for one to two years. The UK and EU FTAs will mainly benefit garments, home textiles, and make-ups, with real gains accruing as India expands garmenting and fabric capacity.
Q: Why has knitting fabric utilization been weak, and will it improve? A: The Chairman and Managing Director attributed the weakness to low value addition in knitting, a lag in fabric price pass-through during rising yarn prices, and US tariff uncertainty that stalled orders. He expects utilization to improve as yarn prices stabilize and trade clarity with the US emerges, noting knitting is under 2% of total investment and largely depreciated.
Q: What are the depreciation and capex outlooks for FY28? A: The CFO said quarterly depreciation will rise from about INR 37.5-38 crores to INR 53-54 crores, or roughly INR 200 crores+ annually. FY28 capex for modernization and balancing is expected at about INR 80-200 crores.
Q: What is the long-term revenue aspiration and next growth phase? A: The Chairman and Managing Director said the company aspires to reach INR 4,800-5,000 crores in revenue by FY29 through existing assets plus modernization and balancing, which could add about 5% capacity. The company is also evaluating garmenting and further value-chain moves, and may raise renewable capacity to about 65% of requirements next year.
Q: Why have receivables risen about 40% since March? A: The CFO said the increase is primarily higher export receivables and lower utilization of bill discounting limits, not extended credit terms or overdue balances.
Q: How does Bangladesh's three-year LDC extension affect Indian competitiveness? A: The Chairman and Managing Director said the extension was expected and does not change the status quo, as India's FTAs remain in place and are no less favorable. On recent Bangladesh labor unrest, he said it is too early to comment but such wage agitations typically settle within a week with no major impact expected.
Q: What is the demand and freight situation with Bangladesh? A: The Chairman and Managing Director said demand from Bangladesh is more or less stable, with no major freight issues on that
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
