Nishat Chunian Limited (NCL) held its analyst briefing session earlier today to apprise the investors about the FY23 KPIs and the company’s future outlook. Some of the key takeaways from the briefing are as follows.

• To recall, NCL reported a LAT of PkR0.9bn (LPS: 4.16/sh) in FY23 compared to a PAT of PkR7.4bn (EPS: 31.10/sh) in the previous year. The spinning segment, contributing ~60-61% of revenue, was the major cause of the loss due to lower yarn exports (22.19% vs 29.28% in the previous year).
• The company has 4 operational divisions namely spinning, weaving, home textiles, power and a retail business i.e., ‘The Linen Company’ with multiple local and international retail outlets.
• NCL has annual cotton requirements of ~4-4.5lac bales, procured competitively at ~PkR17.5K/maund during FY23, which has a local to import ratio of 70:30.
• NCL’s power mix includes Coal, gas, LESCO, and standby generators, with the company heavily relying on its coal-based power plant (~90%) for energy needs. Competitive coal rates are achieved through sourcing from Indonesia, South Africa, and local channels. Moreover the coal costs PkR24-28/kwh, while gas costs ~US$8.5/mmbtu.
• The company emphasized no significant expansions for the year, with focus solely on a few BMR activities.
• One-third of the total debt on the books of the company is concessionary debt which comprises of SBP’s subsidized schemes i.e., EFS, TERF and dollar loans, which can be sourced at cheaper rates.
• The divisions spinning, weaving, dyeing & printing and stitching have annual capacities of 86mn kgs, 345.6mn m2, 63.12mn m2 with FY23 utilization standing at 98.5%/89%/55% respectively. Additionally, the company plans to add new ring winders in their spinning division’s Auto Coro unit.
• The company aims to hit the topline mark of PkR90bn for FY24.

Courtesy – AKD Research