Nandan Denim Research Report By Sunidhi Securities

NDL has a vision of future growth through diversification in order to survive in a highly competitive environment. This is supported with quality products manufactured by NSL along with fully integrated textile plant to cater to the needs of customers by providing a variety of products under one roof. Further, it has targeted to achieve high volume in terms of quantity and value and also adding the capacity to improve its performance and thereby its share in the market. NDL is also in dialogue with the international brand players for the supply of its products.

NDL has one of the largest denim fabric manufacturing capacities in the world. It is the second largest Denim manufacturer in India and 5th largest in the world. With the recent capacity addition, NDL is well placed to capitalize on the soaring demand of Denim Apparel. The ongoing expansion in its denim fabric capacity and backward integration by expanding its spinning capacity in FY15-16 will result in higher operating margins and improved return ratios.

At the CMP of Rs 73, the share is trading at a P/E of 5.9x on FY16E and 3.1x on FY17E. We recommend BUY with a revised upward target price of Rs. 110 (at a P/E of about 4.8x on FY17E) in the medium-to-long term.

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