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Nishat Mills Limited(NML) Company Overview: -

Sarmaaya Desk
Sarmaaya Content Team

Nishat Mills Limited is a public limited company registered in Pakistan and listed on the Pakistan Stock Exchange Limited under the Companies Act, 1913 (now Companies Act, 2017). The Company is in the textile manufacturing business, which includes spinning, combing, weaving, bleaching, dyeing, printing, stitching, and apparel manufacturing, as well as buying, selling, and coping in yarn, linen, cloth, and other goods and textiles made from raw cotton, synthetic fiber, and cloth, as well as generating, accumulating, distributing, supplying, and selling electricity.

In Pakistan, Europe, Asia, Africa, Australia, the United States, and Canada, Nishat Mills Limited is in the textile manufacturing sector. Spinning in Faisalabad and Feroze Wattwan, weaving in Bhikki and Lahore, dyeing, home textiles, garments, and power generation are all part of the company's operations. The company sells yarns made from natural and synthetic fibers, as well as greige fabrics made from yarns, colored fabrics made from diverse greige fabrics, and garments made from processed fabrics. Quilt coverings, quilted chuck, plain and tailored sheets, pillowcases, couches, valances, curtains, baby sets, table linens, and embroidery goods are all available. Furthermore, the company creates, transmits, and distributes electricity using gas, furnace oil, steam, coal, and biomass; and operates hotels, cafes, restaurants, lodging or apartment homes, bakeries, and confectioneries. It also offers business solutions, sells and trades textile and associated items via manufacturing and distribution outlets, and invests in, constructs, owns, runs, and maintains a solar power plant. Nishat Mills Limited is based in Lahore, Pakistan, and was founded in 1951.

Company snapshot:
NML company snapshot

The total market value of NML at the present share price is Rs. 33.93 Billion

Segments of Nishat Mills: -

Following are some segments of Nishat mills and their performance:

Spinning:
Yarn Nine months ended 31 March Increase/(Decrease)
2021 2020 value % age
Sales-(kgs'000') 17,005 15,772 1,233 7.82
Rate/kg 417,72 404,06 13,66 3.38
Sale-(Rs. '000') 7,103,339 6,372,904 730,435 11.46

The Division has planned to enhance its output soon, anticipating increased demand for recovered yarn. The expansion of the open-end yarn production facility is now underway and is projected to be completed by the end of September 2021.

Weaving:
Grey Cloth Nine months ended 31 March Increase/(Decrease)
2021 2020 value % age
Sales-(meters '000') 65,788 62,950 2,838 4.51
Rate/meter 184.39 182.35 2.04 1.12
Sale-(Rs. '000') 12,130,814 11,479,182 651,632 5.68

Weaving business did not improve in the third quarter, as projected, due to the onset of Europe's third coronavirus outbreak. Due to the storm, the fashion industry, in particular, remained sluggish. Due to the ongoing uncertainty, customers are still hesitant to place orders. On the other hand, due to a shortage of fabric in the supply chain and rising demand, the technical fabric business, notable abrasives, is displaying a positive trend.

Dyeing:
Processed Cloth Nine months ended 31 March Increase/(Decrease)
2021 2020 value % age
Sales-(meters '000') 23,913 33,956 (10,043) (29.58)
Rate/meter 360.32 367.11 (4.79) (1.31)
Sale-(Rs. '000') 8,616,344 12,397,587 (3,781,243) (30.50)

Despite the difficulties, the Dyeing Division has succeeded admirably. The Division's sales declined by 30.50 percent in the nine months compared to the previous nine months, and we expect this trend to continue in the current fiscal year's final quarter.

Home Textile:
Processed Cloth and Made-ups Nine months ended 31 March Increase/(Decrease)
2021 2020 value % age
Sales-(meters '000') 24,272 19,342 4,930 25.49
Rate/meter 450.79 441.81 8.93 2.03
Sale-(Rs. '000') 10,941,597 8,545,465 2,396,132 28.04

The Terry unit, which has a daily capacity of 10 tons, has been put into production and is showing good results. The unit is now working at more than 75% of its capacity. Management has intended to expand the current capacity of the terry products to meet future demand.

Garments:
Garments Nine months ended 31 March Increase/(Decrease)
2021 2020 value % age
Sales-(garments '000') 6,153 4,686 1,467 31.31
Rate/garments 916.61 1,075.20 (158.59) (14.75)
Sale-(Rs. '000') 5,639,899 5,038,386 601,513 11.94

The Division's sales increased by 11.94 percent in the last nine months compared to the previous nine months.

Sales and Profits: -

The table shows the sale and the gross profit that the company has made in some previous years. All values are in thousands:

  2020 2019 2018 2017 2016 2015 2014
Sales 60,904,096 63,499,029 53,729,124 49,247,657 47,99,179 51,200,223 54,444,091
Gross profit 7,276,126 7,656,601 5,550,446 5,379,838 6,264,308 6,046,784 7,863,774

Nishat Mills aims to provide quality products to customers and explore new markets to encourage profit of the business through good governance and the development of a strong and dynamic team, to achieve optimum prices for the company's products for long-term and equitable growth and prosperity.

The textile industry had a difficult first nine months of the current fiscal year due to the global economic impact of the coronavirus pandemic. During this time, the world was hit by the second and third waves of the pandemic, resulting in lockdowns and restrictions all over the planet. Now that the vaccine procedure has begun, Nishat mills assume that all persons in the United States and Europe vaccinated by the end of this fiscal year, allowing millions of Americans and Europeans to move freely and work from offices. Demand is projected to increase as a result of this. Despite its promise and bright prospects, the textile market is particularly under severe strain due to rising raw material costs. Since the start of the present financial year's second quarter, we've seen an enormous surge in the price of cotton and synthetic fiber.

Financial Health: -

Company has strong financial health:

  2020 2019 2018 2018 2017
Assets 110,660,914 100,545,392 102,736,033 117,530,275 106,599,219
Liabilities 39,233,054 33,930,122 27,022,888 28,767,479 24,444,064
Equity 71,427,860 66,615,270 75,713,145 88,762,796 82,155,155

The fair value of stock calculated is 216.93 Rs. and it is trading at 96.50. According to our estimates, the stock is trading under its par value and is an undervalued stock. This means that it is a very good investment for people and can generate a large number of profits. Financial stability can also be seen from an increase in earnings and assets from the previous year. The company stock also pays a dividend of 4.32 Rs. meaning that it is a good stock to invest in. Compared to the Luxury industry NML has a pretty good P/E ratio. It has a good amount of short-term assets which exceed both its short-term and long-term liabilities.

From Financial health, we can conclude that NML is a value stock and will act as a good investment for investors in the future until it reaches fair or book value. Plus a dividend is very attractive for investors.




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