Crisil Ratings reaffirms ratings of Nahar Spinning Mills at 'A/A1'

The reaffirmation reflects the company?s established position in the cotton yarn industry, supported by a diversified customer base; long operating track record; presence in both the domestic and export markets; and a healthy operating scale.

The ratings also factor in the expected recovery in operating performance from fiscal 2027 onwards, supported by improvement in yarn realisations, healthy demand from key export destinations, benefits from ongoing modernisation initiatives, and a financial risk profile that is expected to remain comfortable despite debt-funded capital expenditure (capex).

The operating performance moderated during fiscal 2026 due to the US tariffs, leading to lower garment exports and weaker yarn realisations. However, the operating performance recovered from the first quarter of fiscal 2027, supported by improvement in yarn realisations and healthy demand from key export destinations?Bangladesh and China. For the full fiscal, the revenue is expected to grow 9-10% and 4-5% over the medium term.

The company is currently undertaking a modernisation capex of Rs 350-400 crore spread across fiscals 2026-2028, involving replacement of older machinery with technologically advanced and energy-efficient machinery. The capex is expected to improve product quality, operational efficiency, throughput and overall competitiveness.

Timely commissioning without cost overruns, stabilisation of operations and achievement of planned utilisation levels will be monitorable.

The company is also increasing its renewable energy capacity, including solar installations, which is expected to reduce power and fuel costs over the medium term.

The financial risk profile is expected to remain stable despite the ongoing debt-funded capex. The capex, while sizeable, is spread over multiple years and is being funded through a prudent mix of internal accrual and debt. Total debt is expected to remain at Rs 1,000-1,050 crore in fiscal 2027, compared with Rs 983 crore as on 31 March 2026.

Liquidity remains comfortable, aided by adequate cushion of Rs 925 crore in working capital limit, which was 45-50% utilised in the 12 months through June 2026.

These strengths are partially offset by susceptibility to volatility in raw material prices and foreign exchange (forex) rates, uncertain geopolitical situation and the inherently working capital-intensive nature of the textiles business.

Nahar Spinning Mills is the flagship company of the Nahar group, a business conglomerate that operates in the spinning, garments and hosiery segments.

The company's net profit surged 337.84% to Rs 69.88 crore in the quarter ended June 2026 as against Rs 15.96 crore during the previous quarter ended June 2025. Sales rose 17.92% to Rs 966.10 crore in Q1 FY27 over Q1 FY26.

The scrip shed 0.12% to currently trade at Rs 295.10 on the BSE.

Powered by Capital Market - Live News