Analysts banking on a textile firms long-term growth story; what is keeping them excited?
ICICI Direct, which has a buy rating on the stock with a price target of Rs 360, is of the view that capacity enhancement is likely to support the companys long-term growth story.
Nitin Spinners shares have grown more than 50 per cent so far in 2023, having sharply outperformed a 7.6 rise in the headline Nifty index, and analysts are banking on a significant further upside in the company citing the company’s long-term growth prospects. Is it a good time to enter the Nitin Spinners (NITINSPIN) stock at the current juncture?
Many analysts believe the company’s move to expand its production capacity is set to aid its profitability over the long term.
Here’s a lowdown on the company’s performance in the recent past, what analysts make of its growth prospects ahead, and where they place their targets:
Nitin Spinners, a long-term growth story?
Brokerage ICICI Direct, which has a 'buy' rating on Nitin Spinners with a price target of Rs 360, is of the view that capacity enhancement is likely to support the company's "long-term growth story". The target suggests an upside to the tune of 13.6 per cent from the current market price. Its target is based on a valuation multiple of nine times its estimate for the company’s earnings for the year ended March 2023.
The brokerage expects the company to stage a steady recovery from the financial year 2023-24, with revenue and EBITDA estimated to register CAGRs of 15 per cent and 27 per cent, respectively.
The company began the financial year 2023-24 with a weak quarterly show. For the three months to March 31, 2023, Nitin Spinners reported a 56 per cent year-on-year fall in standalone net profit to Rs 29 crore over a 13 per cent decline in revenue to Rs 617 crore. Its operating margin contracted by 310 basis points to 12.3 per cent for the first quarter of the current financial year compared with the corresponding period a year ago.
The company’s management remained optimistic about its long-term growth prospects while mentioning industry-wide short-term challenges. It also said the company demonstrated a healthy performance in terms of capacity utilisation despite headwinds and would continue to improve its position in key markets in the coming quarters.
Why Nitin Spinners?
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