Dolly Khanna, one of our favourite stock wizards, is a staunch believer in the theory that the two sectors that will prosper as a result of the slowdown in China are the specialty chemicals sector and the textiles sector.
We have seen earlier the top-notch stocks from the specialty chemicals sector that Dolly has adorned her portfolio with. Each stock is a powerhouse straining every nerve to fill Dolly’s coffers with riches.
In the textiles sector, Dolly has hand-picked three top-quality stocks. These are Nandan Denim, RSWM and Nitin Spinners.
Nitin Spinners is a micro-cap (Rs. 333 crore) that Daljeet Kohli has great confidence in.
Daljeet has issued a tome in which he has heaped lavish praise on Nitin Spinners and described it as being on a “game changing” path.
Daljeet’s confidence is shared by Awanish Chandra of East Indian Securities, a reputed Calcutta based firm of stock market analysts.
Awanish Chandra has issued an initiating coverage report in which he has succinctly summed up Nitin Spinners’s virtues and explained why it is a compelling buy:
• Pedigreed, Prudent and Visionary Promoters – NSL is promoted by Mr. R. L. Nolkha who has spent around 25 years in the Industry before setting up NSL. Over the last 25 years, the Nolkha family has grown the business very efficiently and have successfully navigated the challenges and threats. NSL’s expansions have been prudently planned in order to keep gearing in check and the management has consciously capped the interest cost to sales at 5%. The management’s long term vision is to reach half a million spindles of yarn capacity. As a part of forward integration, the company also plans to enter fabric processing and value added products which will boost profitability.
• Healthy returns – The company has been successful in maintaining best among the industry operating metrices resulting in a healthy RoAE (FY16 – 23.7%, FY15 – 27.4%) and RoACE (FY16 – 17.7%, FY15 – 16.7%) consistently during past couple of years. We believe that NSL will further enhance return ratios on account of richer product mix.
• Well timed capacity expansion – NSL timed its capacity expansion very well by doubling capacity in 2014 to 150,096 spindles which helped it capture the textile up cycle. The company’s yarn utilization level has already reached 100% and NSL is adding another ~73,000 spindles by March 2017. These expansions would give a big boost to earnings.
• Attractive valuations – NSL is trading at 4.4x FY18E earnings which is very cheap considering the many merits and strengths. We initiate coverage with a buy rating and a TP of Rs 155.
It is notable that Awanish Chandra’s target price for Nitin Spinners is Rs. 155 which means that he believes that the stock has an upside of more than 100% as compared to the CMP of Rs. 72 (incidentally, the stock surged 14% today).
Daljeet’s target price is relatively modest at Rs. 112. However, even this offers a hefty upside potential of nearly 55%.
Now, the moot question is which of Dolly Khanna’s textile stocks will fill her coffers with the maximum gains. Any guesses?
But for the concern on the debt equity ratio of 2.3x all other fundamentals are great. There’s no doubt the stock holds good potential over the medium to long term. Will invest once the stock comes down from today’s surge.
Nitin spinners is a definet buy. Anyone who has half a brain will buy Nitin spinners becuase the upside potential is guaranteed, and the downside risk is non existence. Buy and you will be rewarded. The minimum price is Rs100 so it is a no brainier for novice investors to buy it.
Well said D divine – I am holding patiently Nitin Spinn.. + Nandan Denim, RSWM, Sutlej and Gokaldas (thanks to Porinju) since last 8 months , iske acche din jaroor ayenge !!
Whenever textile stocks start rising , it is an indication that market is in trouble.
#Niveza #Review on Following Article::
Nitin Spinners Ltd. is emerging as one of the favorite stocks for majority of the investors. Valuation of the stock is tempting at current levels as revenue growth was good and looking more stable in future too. Stock is trailing at 4x PE which is very reasonable. Debt is also stable for the company and earning are improving year after year. One can consider it as multibagger stock as with current fundamentals stock is looking like giving more than 100 per cent returns in coming years.
Multibagger STock Ideas
At what price one should enter?