East India Securitie's report on Nitin Spinners
Nitin Spinners Ltd (Nitin) came out with a weak set of numbers, in-line with estimates during Q1FY21 as Covid issues impacted operations, after a strong show in Q4FY20. Operations of the company were on halt for the first 20 days of the quarter, and resumed gradually post that. The company registered a sales degrowth of 22.6% YoY to Rs2,191 mn, led by ~25% YoY volume degrowth in yarn business. Although realization in yarn segment was down 9% YoY, gross margin of overall business improved by 474 bps YoY because of higher correction in cotton prices and contributions from the new woven fabric division. EBITDA de-grew by 38.1% YoY/ 56.7% QoQ to Rs236 mn, due to negative operating leverage. The company has been ramping up capacity utilization to service export orders in hand. We believe That the company will come back with strong set of performance as and when pandemic situation eases out globally.
Outlook
We continue to maintain our BUY rating on the stock of the company with a target price of Rs96 per share, 8xFY22e EPS.
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