Nishat Mills Eyes Renewable Energy Investments Amid Competitive Market

Lahore: Nishat Mills Limited (NML) conducted a corporate briefing today, addressing its financial performance and future strategies. The company’s management highlighted intensified competition in European markets, partially due to shifts from countries affected by U.S. tariffs, such as Bangladesh. In response, NML plans significant investments in renewable energy and capacity expansion.

Nishat Mills plans to bolster its renewable energy capacity with the installation of an additional 4MW of solar power. This complements the 38MW already in place. The company is also considering investments in a 45TP steam boiler and battery-storage infrastructure. Efforts to expand production include increasing open-end yarn capacity to 13,000 rotors and constructing a workwear garments unit, expected to be operational by FY25.

Financially, NML faces rising costs, including a Rs920 million increase in freight expenses and enhanced commission costs from higher sales. The company’s fuel mix for FY25 will rely heavily on coal, biomass, and solar, with the remainder sourced from various suppliers based on cost efficiency. The weighted average fuel cost is projected between Rs35-38/kWh.

Nishat Mills is diversifying its product offerings, focusing on denim and technical textiles to navigate global pricing pressures and local economic challenges. The company maintains a proactive stance in expanding to new markets, including additional European and non-traditional sectors.

The management forecasts gross margins to stay around 11%, though dividend payouts will be affected by rising working capital needs and equity investments. The company’s sales mix is notably diverse, with substantial contributions from Europe, direct exports, and the domestic market.

NML anticipates future challenges, including high gas and electricity tariffs and limited local raw cotton availability. Despite these hurdles, the company remains optimistic, sustaining a BUY recommendation with favorable trading projections for FY26 and FY27.