NML: all kinds of growth and expansions

Whether it is the dividend on a portfolio or the export return, Nishat Mills Limited’s (PSX: NML) growth prospects are optimistic - especially with events like extended economic shutdown due to COVID, the US-China trade war, and central bank and government’s policy focus on textile sector growth. The textile company’s financial performance in FY21 is also a return to the sanguine outlook.

After dipping by 4 percent year-on-year in FY20, NML’s revenues in FY21 grew by 17 percent - one of the highest growth rates in the last 6 years. Cost of sales for NML rose in tandem; and while the share of COGS rose in FY21, NML saw a 28 percent year-on-year jump in gross profits. Growth in sales despite currency appreciation was due to higher exports and new customers as well as better prices for value-added products. The sales for the last quarter of FY21 were up by more than 84 percent year-on-year. These factors along with inventory gains due to higher local and international cotton prices supported the gross profit growth.

NML’s bottomline was up by 69 percent year-on-year in FY21, and along with growth in operating profit, higher dividend income from MCB, Lalpir Power Limited, and Pakgen Power LImited was also a great source of support to the profitability of the company. At the same time, reduction in finance cost also played a role to boost earnings for FY21. NML announced a final cash dividend of Rs4.0/share.

With textile exports picking up and the export landscape encouraging, NML has capacity expansion plans in spinning, weaving, readymade garments, and its recently introduced ‘terry’ segment on FY21 - all of which will help the company pick up its share in the country’s textile exports. And lastly, with Hyundai-Nishat Motors, there are prospects of increasing dividend generation stream in the coming years are also optimistic due to rising auto demand and increasing production capacity.