Why Nandan Denim Share Price is Rising

For the past five years, Nandan Denim share price was on a phenomenal ride. It established itself as a true multibagger stock. Investors have enjoyed a staggering growth of 220.1% over this extended period.

This impressive long-term performance has translated into continued investor confidence. More recently, the textile stock witnessed a significant gain. It's delivering multibagger returns once again. In the past year, the growth clocked in a return of 129.5%. And the momentum didn't stop there.

In the last five days alone, Nandan Denim share price has rallied over 10%, adding further fuel to the fire of investor interest.

Read on to know the reasons behind this upward trajectory.

#1 Stock Split Proposal

A recent announcement by textile company Nandan Denim has sent its stock price soaring.

In a Bombay Stock Exchange (BSE) filling, the company revealed that its board of directors will meet on 17 June 2024, to consider and approve a potential stock split. This news has triggered a surge in investor interest, pushing the share price upwards.

Stock splits are often seen as a positive indicator for a company's future prospects. When a company's share price has climbed significantly, a split makes the stock more affordable for individual investors. This increased accessibility can lead to greater trading volume and liquidity, which can in turn drive the price even higher.

The announcement of a potential split can also be interpreted as a sign of management's confidence in the company's future. Companies typically only consider stock splits after a period of sustained growth. Investors often view such confidence as a positive signal, leading them to buy shares in anticipation of continued gains.

While the actual split hasn't happened yet, the prospect has clearly captured the imagination of investors. This pre-split price increase highlights the psychological appeal of a lower share price and the potential for future growth.

#2 Good Financial Performance

In Q4 FY24, Nandan Denim's net profit climbed 882.3% to Rs 271.1 million (m), compared to Rs 27.6 m reported in the corresponding period a year ago. Subtle reduction in expenses boosted net profit of the company.

Its revenue from operation grew 26.7% to Rs 5,791.2 m in the quarter that ended in March 2024 compared to Rs 4,571.6 m reported in Q4 FY23. The rise in revenue was driven by a resurging demand of denim.

The company's bottom line has seen a significant uptick, throughout the year. Net profit for FY24 spiked 8,384.9% to Rs 449.7 m, compared to Rs 5.3 m reported in the previous year.

However, during the year under review, its sales decreased marginally by 0.8% to Rs 20,100.9 m, compared to Rs 20,267.6 m reported in FY23.

Nandan Denim Financial Performance Summary

Particulars	Q4 (Rs in m)	YoY increase (%)	FY24 (Rs in m)	YoY increase (%)
Net profit	271	882.3	449.7	8384.9
Revenues	5,791.2	26.7	20,100.9	9.9

Source: Nandan Denim Financials

What Next?

The denim industry is experiencing a welcome resurgence after a challenging year.

Demand for denim has surged both domestically and internationally, pushing denim manufacturers in Ahmedabad, India (the denim capital) to near full capacity utilisation.

Nandan Denim is reaping the benefits of this upswing. Just a few months ago, these plants were operating at a reduced capacity of around 50-60%. Today, they're humming at an impressive 85-90%.

This resurgence translates to good news for Nandan Denim. The improved global and domestic demand for denim presents them with increased sales opportunities.

Additionally, cotton prices remaining at two-year lows make production more affordable, potentially boosting their bottom line. Finally, reduced inventory across the global value chain is yet another positive.

This strong demand and high capacity utilisation are positive signs that point towards a bright future for Nandan Denim.

The company currently faces strong industry tailwinds. However, investors should consider potential volatility due to industry cycles and competition.

How Nandan Denim Share Price has Performed Recently

In the past five days, Nandan Denim share price has rallied more than 9%. In the last month, it is up 22.9%.

In 2024, so far its share price surged 22% and more than 55% in the last year.

The stock touched its 52-week high of Rs 230.7 on 28 May 2024 and a 52-week low of Rs 144.5 on 2 June 2023.

About Nandan Denim

Founded in 1994 as a textile trade company, Nandan Denim Ltd is a subsidiary of the Chiripal group. It's currently the largest denim fabric producer in India and the fourth largest globally.

The company produces a broad range of textiles, more than 2,000 denim items a year, a variety of shirting alternatives, and yarn made of organic cotton that is environmentally beneficial.

Nandan Denim has a huge manufacturing capacity and even in-house research and development to continuously innovate and enhance its textile offerings. It supplies to major Indian merchants exports to over 27 countries.

To know more check out the company's factsheet and quarterly results.

For a sector overview, read our textiles sector report,

You can also compare the company with its peers:

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