Nitin Spinners Navigates Headwinds with Strategic Expansion and Green Initiatives

Nitin Spinners Limited, a key player in India's textile manufacturing sector, reported its financial results for the second quarter and first half of fiscal year 2026, reflecting the challenging global market conditions. The company's Q2 FY26 revenue stood at INR 760.1 crores, a decline of 7.6% year-on-year, while EBITDA was INR 99.6 crores, down 13.5%. Profit After Tax (PAT) also saw a decrease of 17.5% to INR 34.8 crores. These figures underscore the broader industry pressures stemming from elevated domestic cotton prices and uncertainties surrounding U.S. tariffs.

The company's product mix for Q2 FY26 showed Yarn contributing the lion's share at 73.1% (INR 555.8 crores), followed by Fabrics at 21.6% (INR 164.5 crores), and Others accounting for 5.2% (INR 39.8 crores). Geographically, exports continued to dominate, making up 61.0% of the revenue, with the domestic market contributing 39.0%. The management noted that while sales volumes were slightly impacted by deferred orders, operational utilization remained strong, with spinning capacity at over 95% and woven fabric capacity at nearly 90%.

Strategic Vision Amidst Volatility

Despite the current headwinds, Nitin Spinners' management expressed confidence in an improved second half of FY26. This optimism is fueled by the Indian government's temporary removal of import duty on cotton until December 2025 and anticipated progress on the U.S.-India trade agreement. The company's strategic focus remains on strengthening its product portfolio through optimization and diversification, particularly into higher-margin opportunities.

A significant part of this strategy is a substantial capital expenditure plan of approximately INR 1,100 crores. This investment aims to boost spinning capacity by 25% and fabric division capacity by over 50%. The management projects this expansion to add around INR 400 crores in revenue in the next financial year, with a potential to reach INR 1,000 crores from the new capacity once fully utilized, bringing total revenue potential to INR 4,200 crores at current yarn realizations. This expansion is expected to be fully operational by FY27-28.

Driving Efficiency and Sustainability

Nitin Spinners is also making strides in operational efficiency and environmental sustainability. The company's power-saving initiatives include adding 11MW of solar power capacity and securing an 18 MW hybrid power purchase agreement. These measures are projected to reduce power costs by about 5%, translating to annual savings of INR 10-12 crores, thereby enhancing profitability and reducing its carbon footprint. The company is also benefiting from policy support, with its expansion project eligible for interest subsidies, capital subsidies, and electricity duty benefits under the Rajasthan Investment Promotion Scheme 2024.

The company's commitment to sustainability extends to its product offerings, with increasing use of sustainable fibers like organic, BCI cotton, and recycled fibers. This aligns with growing global demand for eco-friendly textiles and positions Nitin Spinners favorably in the market.

Forward-Looking Outlook

Nitin Spinners is proactively addressing market challenges by focusing on value-added products, expanding into new geographies, and enhancing its product basket to include blended yarns and specialized fabrics. The company's well-diversified export presence across more than 50 countries provides a strong foundation for growth, with particular attention to markets like the UK and EU, especially with potential free trade agreements. The management anticipates that once global uncertainties settle and inventory pipelines normalize, a reasonable demand pickup will occur.

In conclusion, Nitin Spinners Limited is demonstrating strategic clarity and disciplined execution. Despite a challenging quarter, the company is making significant investments in capacity expansion, sustainable practices, and product diversification, all aimed at driving long-term growth and enhancing shareholder value. The focus on value-added products and cost efficiencies positions the company to capitalize on future market opportunities and navigate the evolving textile landscape with confidence.