Nandan Denim – Textile Stock to Watch Ahead of Its Earnings

Nandan Denim Limited (NDL), a prominent name in India’s textile sector, has seen significant growth recently. The company’s share price advanced by 1% today and has gained over 70% in the past year. As the market awaits its earnings announcement on January 28, 2025, NDL continues to capture investor attention.

Earnings Announcement Ahead

The Board of Directors is scheduled to meet on January 28, 2025, to review and approve the unaudited financial results for the quarter and 9 months ending 31 December 2024. This announcement is expected to provide insights into the company’s performance amidst its ongoing growth trajectory.

A Brief History of Nandan Denim Limited

Incorporated in August 1994 by Mr Vedprakash Chiripal and Mr Brijmohan Chiripal, Nandan Denim Limited began as a private entity focused on trading and exporting textile products. The company transitioned into a public limited entity in 2004 and entered the manufacturing domain by establishing a denim fabric weaving capacity of 20 million metres per annum (MMPA). Over time, this capacity expanded to 110 MMPA, and in 2014, NDL diversified into shirting fabric with a capacity of 10 MMPA.

With two manufacturing facilities in Ahmedabad, Gujarat, and a 15-MW solar power plant meeting its energy requirements, NDL has built a sustainable and efficient operational framework.

Financial Performance: A Steady Ascent

NDL’s financial health improved significantly in FY24, marked by a reduction in debt and improved profitability. Key highlights include:

• Capital Structure Improvements
  The company’s debt-to-equity ratios improved markedly as of March 31, 2024:
  • Long-term debt-equity ratio: 0.26x (vs 0.42x in FY23)
  • Overall gearing ratio: 0.56x (vs 0.86x in FY23)
  • TOL/TNW: 1.02x (vs 1.35x in FY23)

This improvement is attributed to profit accretion in reserves and a significant reduction in debt levels.

• Profitability Growth
  NDL’s profitability saw a remarkable turnaround:
  • Profit Before Tax (PBT): ₹65.12 crore (vs ₹5.14 crore in FY23)
  • Profit After Tax (PAT): ₹44.97 crore (vs ₹0.53 crore in FY23)

This growth stemmed from reduced production costs and operational efficiencies, with PBT and PAT margins improving to 3.18% and 2.20%, respectively, in FY24, compared to 0.25% and 0.03% in FY23.

Sustainability Initiatives

NDL’s commitment to sustainability is evident in its use of renewable energy. The 15-MW solar power plant within its premises highlights the company’s focus on eco-friendly manufacturing, reducing its carbon footprint while ensuring cost efficiencies.

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