Shares of textile manufacturer Nandan Denim saw a positive movement during Tuesday's trading session, climbing nearly 1% to reach ₹2.94 per share. This uptick followed a significant announcement regarding the company's creditworthiness.
Credit Rating Reaffirmation Signals Stability
In a filing to the stock exchanges, Nandan Denim disclosed that Infomerics Valuation and Rating Pvt. Ltd. has reaffirmed the credit ratings on its bank facilities. The total facilities, aggregating ₹339.74 crore, have maintained their previous ratings, indicating stability in the company's financial profile.
The detailed breakdown shows that long-term borrowings worth ₹279.74 crore continue to be rated 'IVR BBB' with a 'Stable' outlook. Simultaneously, short-term facilities amounting to ₹60 crore retain their 'IVR A3+' rating. This reaffirmation by the rating agency underscores the company's adequate credit profile and comfortable liquidity position, providing reassurance to lenders and investors.
Financial Performance: A Mixed Quarter
The company's financial results for the second quarter of the fiscal year 2025-26 present a nuanced picture. Nandan Denim reported a 7.70% decline in operational income, which stood at ₹786.51 crore compared to ₹852.17 crore in the same quarter last year.
However, the company also managed to reduce its expenses during this period. Costs fell to ₹778.20 crore from ₹840.76 crore a year earlier. On the profitability front, there was a silver lining as the bottom line improved. The company's net profit witnessed a 7.64% year-on-year increase, rising to ₹9.44 crore from ₹8.77 crore in the corresponding quarter of the previous fiscal year.
Stock Performance: A Volatile Penny Stock
Nandan Denim's stock, trading below the ₹5 mark, exhibited volatility on Tuesday. It opened at ₹2.85 on the BSE, lower than the previous close of ₹2.91, but quickly recovered its losses to trade higher.
The stock's journey has been turbulent across different time frames. In the near term, it has faced pressure, shedding over 6% in one month and 24% over the past six months. The decline extends to a 40% drop over the last year.
Despite recent setbacks, Nandan Denim has been a wealth creator for long-term investors. The penny stock has delivered multibagger returns of 220% over a five-year period, effectively doubling investor wealth. The stock's 52-week high stands at ₹5.18 (touched on January 2, 2025), while it hit a 52-week low of ₹2.85 earlier in Tuesday's session.
The reaffirmation of credit ratings serves as a key positive development for Nandan Denim, potentially bolstering investor confidence in its financial stability amidst a challenging market environment for the textile sector.
