Nishat Mills Limited Reports Robust Growth in FY23, Expands Portfolio

Lahore, Nishat Mills Limited (NML), a leading textile company in Pakistan, held an analyst briefing to discuss its performance in the fiscal year 2023 and provide insights into its future direction. The company reported significant growth in sales and profits, along with strategic expansions and investments.

According to AKD Research, NML achieved total sales of PKR 141.7 billion in FY23, a substantial increase from PKR 115.7 billion in the previous year, representing a 22.4% growth. This increase was driven by a PKR 18 billion rise in exports, with the rest attributed to local sales. The management expects export sales to grow by approximately 10-15% in the current fiscal year. The company's reported Profit After Tax (PAT) for FY23 was PKR 12.1 billion, compared to PKR 10.3 billion last year, fueled by increased other income from dividends, interest (from subsidiaries/associates), and exchange gains.

NML faced a significant rise in finance costs, primarily due to the withdrawal of sectoral subsidies by the State Bank of Pakistan (SBP), leading to an additional cost of PKR 4.7 billion. The company’s energy mix for FY23 included RLNG (31%), Dual fuel stand by generators (28%), WAPDA (18%), Furnace Oil (10%), and Solar (3%), with the Weighted Average Cost of Energy (WACOE) at PKR 30/Kwh and Weighted Average Cost of Gas (WACOG) at PKR 2.3K/mmbtu. The current rates for WACOE and WACOG have risen to PKR 43/Kwh and PKR 3K/mmbtu, respectively.

The management addressed the rising Short-Term Borrowings (STB), attributing it to growing Working Capital (WC) needs due to expanding sales volumes. NML currently holds enough cotton to last until the end of May 2024, with around 30% of its yarn production consumed internally and the remainder sold externally. The company typically maintains a backlog of orders ranging from 90 to 200 days.

NML’s capital work in progress has increased due to significant investments in denim expansion, terry production, and work-wear manufacturing. Additionally, the successful acquisition and integration of Wernerfelt A/S into NML’s portfolio marks a strategic move to diversify and strengthen its market position.

The management also announced the successful completion and commissioning of Solar Power Projects with a capacity of 9.86 MW, now fully operational for the current fiscal year.