1. At a Glance
Big mills. Bigger ambition. Tough quarter. Nahar Spinning Mills Ltd (NSML) sits at a market cap of ~₹688 Cr with a stock price hovering around ₹191, trading at 0.44× book while ROE naps at 0.71%. Three-month returns are bruised (-13.2%), six-month returns aren’t smiling either, and the latest quarter delivered a PAT loss of ₹-12.7 Cr on sales of ₹703 Cr. Yet, zoom out: FY24 sales ~₹3,177 Cr, exports ~53%, promoter holding a steady 67.4%, and a balance sheet that’s been through multiple capex marathons. OPM for the TTM is ~5.19%; interest coverage is 1.51× (read: treadmill mode). The stock screams “deep value optics,” the operations whisper “cycle timing matters,” and the capex story says “don’t judge me mid-rep.”
2. Introduction
Founded in 1980, NSML is part of the Nahar Group’s textile empire—spinning cotton/blended yarn and stitching hosiery knitwear with scale that would make smaller mills sweat. It exports to Bangladesh, China, Egypt, Vietnam, and maintains relationships with North American garment retailers. The company isn’t new to volatility; textiles rarely are. What’s new is post-expansion digestion colliding with a soft demand quarter.
FY24 saw capacity additions and modernization complete; FY25/early FY26 show the hangover: margins compress, interest bites, and quarterly profits wobble. The market hates ambiguity; NSML is serving a buffet of it. The question isn’t whether the company can produce yarn—it can. The question is whether utilisation + pricing + working capital discipline can synchronize before patience runs out.
3. Business Model — WTF Do They Even Do?
NSML runs an integrated textile chain: spinning (cotton/blended), mercerizing-cum-dyeing, knitting, garmenting. Plants across Punjab
(Ludhiana, Jitwal Kalan, Jodhan, Lalru) and Madhya Pradesh (Raisen, Mandideep). Power? In-house cogeneration (3.8 MW + 4.8 MW) and solar (~2.89 MW)—because electricity bills don’t negotiate.
Revenue mix FY24: Products ~96%, export incentives ~3%, services ~1%. Geography: Exports ~53%, Domestic ~47%. Translation: global demand swings matter. When cotton prices wobble or retailers blink, volumes and spreads feel it. NSML’s edge is scale + integration; its weakness is commodity cyclicality. Smart mills win cycles by sweating assets and protecting cash. Lazy cycles punish everyone equally.
4. Financials Overview
Quarterly Comparison (₹ Cr):
| Metric | Latest Qtr | YoY Qtr | Prev Qtr | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 703 | 812 | 779 | -13.5% | -9.8% |
| EBITDA | 15 | 38 | 26 | -60.5% | -42.3% |
| PAT | -12.7 | 1 | -5 | NA | NA |
| EPS (₹) | -3.58 | 0.21 | -1.29 | NA | NA |
Commentary: Revenues slipped, margins slipped harder, interest didn’t blink. That’s how losses happen in capital-intensive textiles.
Annualised EPS Rule: Q3 → Do not annualise a single strong quarter ×4. Average Q1–Q3 FY26 EPS = (1.84 − 4.84 + 0.21)/3 ≈ −0.93 → Annualised ≈ −3.7. P/E optics based on trailing EPS remain noisy—handle with gloves.
5. Valuation Discussion — Fair Value Range Only
Method 1: P/E (Normalised)
Textiles
