Should Nitin Spinners be a part of your diversified portfolio?

Portfolio management is not only about picking winning stocks but also about choosing the right stock that can contribute to the portfolio diversification.  Incase investors are looking for adding a stock in the portfolio to fulfill diversification needs as well as generate some alpha, Nitin Spinners can be a smart buy.

Nitin Spinners is an ISO 9001:2008 company and a Government of India recognized Export House, manufacturing 100% Cotton Yarns and Fabrics. Located in North West India at Bhilwara, Rajasthan, Nitin Spinner's stringent commitment to Global standards of Quality has seen the company grow phenomenally over the last decade. The company has kept up pace with changing global customer demands for textiles and has focused its attention on select core products. Such a focus has enabled the company to play a dominant role in the global textile arena.

Nitin Spinners with a market capitalization of Rs 375 Crores is trading at a PE of 9.16. Nitin Spinners is trading at a substantial discount to its peers such as Indo Count Industries which is trading at a PE of 19x and KPR Mills which is trading at 13.81x PE. The Price to Book ratio for the counter is 2.25x compared to price to book ratio of 9x for Indo Count Industries Ltd. Over a period of three years the stock has generated 123 percent annualized returns. On YTD basis the stock has delivered a whopping 192.47 percent returns. On one year basis the stock has generated 272 percent returns. The dividend yield for the counter stands at 1.22 percent.

Nitin Spinners has shown significant improvement in its operating margins over a five year period. The Net profit margin for the counter has more than tripled over the five year period. The company has delivered extraordinary growth in revenues and profits. With excellent growth trajectory and improvement in margins the stock can be looked at from an investment perspective for long term. Adequate attention needs to be given to portfolio strategy and whether adding a stock from textile sector can provide diversification benefits.