Nitin Spinners Q4 FY26 earnings call

Nitin Spinners reported its highest-ever quarterly revenue in Q4 FY26, reaching ₹859.8 crores, a 7.4% QoQ and 2.2% YoY increase. This growth was primarily driven by improved demand and better yarn prices. EBITDA for the quarter stood at ₹130.4 crores, growing 16.9% QoQ and 8.4% YoY. The EBITDA margin expanded by 124 basis points QoQ to 15.17%, attributed to improved realization, operational efficiency, and cost-saving initiatives. Profit after tax also saw a significant rise of 29.2% QoQ and 23.7% YoY, totaling ₹57.4 crores.

For the full financial year 2026, revenue was ₹3,213.9 crores, a marginal decrease of 2.8% YoY, mainly due to lower yarn and raw material prices in the first half. EBITDA for FY26 was ₹452.8 crores, a 4% degrowth YoY, with an EBITDA margin of 14.09%. Despite these challenges, profit after tax for FY26 increased by 1.2% YoY to ₹177.6 crores. The company's balance sheet remained strong, with net debt to equity improving to 0.76x as of March 31, 2026, from 0.89x in the previous year.

FY26 was a challenging year for the textile industry, marked by U.S. tariff uncertainties, the West Asia conflict, and supply chain disruption^🌐s. However, the year ended on a positive note for upstream textile players due to an uptick in demand and improved yarn prices. The industry observed improved demand in Q4 FY26, partly due to the removal of U.S. tariffs, restocking activities, and increased transit times. Cotton prices, both international and domestic, were at their lowest levels in 3-4 years during the first half of FY26 but showed an upward trend towards the end of the year.

The company's ongoing capex plan of approximately ₹1,000 crores is progressing well, with commercialization expected in H2 FY27. This expansion will increase fabric capacity from 35 million to 75 million meters annually and spinning capacity from 22,000 tons to 130,000 tons. Management noted that over ₹300 crores has already been spent on the project, with the remaining to be spent in the current financial year. This capex aims to broaden the product range, serve new geographies, and increase the share of value-added products, leading to an improved margin profile.

Nitin Spinners is actively expanding its renewable power footprint to reduce per-unit power costs. An additional investment of ₹9.5 crores was made for a 10 MW hybrid power purchase agreement, expected to be operational by Q3 FY27. This brings the total renewable capacity to about 75 megawatts, nearing 100 megawatts of total power capacity. These additions are projected to cater to 50-55% of the company's present and future power requirements, with an expected annual saving of ₹50 crores once fully operational, and ₹30-35 crores in the current year.

The company is confident of improved overall performance, supported by better demand visibility, increased realizations, and capacity expansion. The India-U.K. FTA is expected to fructify soon, benefiting the Indian textile industry by eliminating duty disadvantages. The India-EU FTA is also anticipated to boost the industry, with implementation expected in a couple of quarters. These FTAs are expected to drive strong order inflows and improved competitiveness, with European customers already showing interest in diversifying sourcing from India.

Yarn spreads have improved, with current spreads at around ₹120-125 per kg, up from ₹110 per kg in the previous quarter. Management believes these spreads are sustainable. Polyester prices increased by ₹25-27 per kg, and cotton prices by ₹30-35 per kg in the last three months, maintaining parity between international and domestic prices. The industry continues to advocate for the permanent removal of cotton import duty to ensure stable raw material availability, citing no threat to farmers due to the minimum support price mechanism.