Report By: Surbhi Bagaria surbhi@dynamiclevels · Trident Ltd- A breakthrough in Textile Industry...

1 | P a g e

Page | 1

Report By: Surbhi Bagaria – [email protected]

Source: Company, www.dynamiclevels.com

Trident Ltd- A breakthrough in Textile Industry

Trident Ltd ………………………………………………………………….……3

Product Overview……………………………………………………….….…..4

Segment Overview ………….…………….…….…………….…….….…..…6

Trident Milestones…………………….……....………….…...….….……...7

Company Financials………………………...……………..………….….…..8

Peer Comparison…………….…………………………………….……..…..12

Shareholding Pattern……………………………….…..……………....….13

Textile Industry Outlook…………………………..…..……………....….14

Indian Home textile Industry……………………..………..….…....….15

Investment Rationale………………………………….………….......…..16


Trident Ltd.

Trident Ltd is the flagship company of Trident Group, a USD 1 billion Indian business conglomerate and a global player. Headquartered in Ludhiana, Punjab, Trident is the world’s largest terry towel and wheat straw based paper manufacturer. With the establishment of the state-of-the-art manufacturing processes and systems coupled with appropriate human capital and credentials, Trident has frequently received accolades from its patrons in recognition for delivering high quality standards and for its customer-centric approach. The Company operates in 2 major business segments: Home Textiles and Paper with its manufacturing facilities located in Punjab and MP. Trident’s has customers in more than 100 countries across 6 continents and comprises of global retail brands like Ralph Lauren, JC Penney, IKEA, Target, Wal-Mart, Macy's, Kohl's, Sears, Sam's Club, Burlington, etc. With export turnover accounting for about 30% of total sales of the Company, Trident Group has emerged as one of the world’s largest integrated home textile manufacturer.

FY16 Financial Highlights: Net Revenue at RS 3705.8 cr in FY16 compared to RS 3779.2 cr in

FY15 EBITDA increased by 8% to RS 750.9 Cr. during FY16 from RS 695.1 Cr.

EBITDA Margin improved by 190 bps to 20.3% vs18.4% Finance Cost declined by 34% to RS 136.4 Cr. from RS 205.9 Cr. PAT higher by 93.9% to RS 228.44 Cr. Vs RS 117.83 Cr. Diluted EPS increased to RS 4.44 per share vs RS 2.47 per share Cash Profits at RS 566.07 Cr. Vs RS 439.14 Cr. Cash EPS enhanced to RS 11.12 per share Vs RS 9.19 per share Dividend Payout Ratio of 20.3% Debt Repayment of RS 462.2 Cr. in FY16 Includes prepayment of high

cost debt of RS 90.5 Cr. Debt / Equity Ratio stands at 1.92:1

o Net Debt / Equity Ratio stands at 1.86:1 o Gross and Net Debt stood at RS 3368.1 Cr. and RS 3286.3 Cr.

respectively o Debt at peak level after commissioning of Integrated Bed-

Linen project; to notably reduce in the coming years o More than 70% of Long Term Loan covered under TUF (low

cost debt) Major CAPEX over – significant free cash flow generation anticipated

from FY17 onwards leading to notable reduction in long term debt

Chart Hypothesis: Above is the weekly price chart of TRIDENT for last 1 yr, in which we can see that it made a new high of 55.5 recently and is consolidating at 49 levels which is month 1 low.

TRIDENT Share Price Performance EXCHANGE SYMBOL TRIDENT Current Price * (Rs.) 49.05 Face Value (Rs.) 10 52 Week High (Rs.) 62 (3-12-15) 52 Week Low (Rs.) 22.5 (16-6-15) Life Time high (Rs.) 62 (3-12-15) Life Time low (Rs.) 3.5(28-3-02) Average Daily Movement 2.48 Average Volume [20 days] 620758 1 Month Return (%) -1.17 P/E Ratio (x) 11.28 Book Value 33.08 Market Cap (Cr) 2578.15(CR) % of Promoter holding pledged

NIL

CMP Rs 48 Target: 60 FY17P/E: 11.28


Product Overview

Trident is the World’s Largest Integrated Home-textile manufacturer. It has the World’s largest terry towel project in Budni (M.P.) coupled with manufacturing facility at Barnala (Punjab). It has a capacity of 360 million pieces of towel p.a . It commenced production at the Bed Linen facility of 500 looms capable of producing 43.2 mn meters p.a. One of the largest cotton yarn spinning capacity in India with 5.55 lac spindles & 5504 rotors capable of producing cotton, compact and blended yarn. It is also present in Yarn, Paper & Chemicals and Energy segment Home Textiles: With consistent investment in technology, constant research

and an innovative approach, Trident has acquired wide and varied global scale

capabilities in terry towel and bed sheet production. From a variety of fibers

and yarns to a range of colors, both in piece dyed and yarn dyed, plains &

jacquards, to a complete collection of performance finishes and surface

decorations, Trident’s range keeps expanding to meet the unique needs of the

customers. Trident Group is amongst world's largest terry towel and bed-linen

manufacturers and draws economies of scale from large capacities. Trident

Group has partnered with some of global-best technology companies and

system providers to bring best-in-class, cost-effective and fast produced

products. Trident’s wide range of product portfolio includes a wide variety of

towels, bed sheets, blankets, dohars and bathrobes. Clients include: Calvin

Klein, Carrefour, H&M, IKEA, ITC Hotels, JCPenny, Lifestyle, Macys, Marks&

Spencer, Oberio Hotels & Resorts, Sams, Sears, Taj, Shoppers Stop, Target

and Walmart

Trident yarn: Trident Yarn (formerly known as Abhishek Yarns) had a modest beginning in 1993 with just 17,280 spindles at Barnala (Punjab), under a highly competitive environment with established yarn manufacturers in the industry. For the company, it was a challenge that had to be met and as a resultant today, the company takes pride in being one of the eminent yarn manufacturers and suppliers of high performance knitting and weaving yarns. With a clearly defined customer centric approach, Trident has achieved a reputation of being one of the dominant players in the domestic and international markets. The growth story continues as the company is all set to expand and modernize its capacities to become one of the eminent yarn exporters. After recently adding 1920 rotors to its capacities at Budhni (Madhya Pradesh, India) and upgrading the open end yarn production capacity to 5504 rotors, Trident Group envisages to further increase yarn production capacity to 5.55 lakh spindles post the on-going expansions.


Paper & Chemicals: Being one of the leading copier paper manufacturers in India, Trident aspires to provide premium quality paper to its clients all across the world. Backed by state of the art manufacturing facility and a strong network of 60 distributors, Trident is world’s largest wheat straw based paper manufacturer. Trident’s premium a4 size copier paper is not just of high quality but also a promise of sustainable green planet. Trident’s wide range of digital print paper ensures exceptional printing experience. Trident’s value-added paper comes with not just with an assurance of quality but also a promise of sustainability and a greener planet. This eco-friendly copier paper & eco-print paper of international accepted quality is produced with extreme care to provide perfect value for money for Trident’s customers. Energy: Keeping in view the increasing requirements of continuously expanding operations, Trident generates captive power to meet the demands of the industry. With theme of Energy conservation and green environment, Trident Energy is producing steam and power using eco-friendly process. The total Black Liquor effluent of pulp process along with Biomass and Coal is used to generate high pressure steam in cogeneration process. The First unit of 9.4 MW got commissioned in 1999; the production capacity of which has now been increased to 50 MW.

Capacities

The Group posseses the capacity of 50 MW captive power generation.

Cogen 1 equipped with 9.4 MW TG of ABB alongwith 50 TPH power boiler of IJT at 63 kg /cm2 pressure.

Cogen 2 and 3 each equipped with 20 MW Siemens Turbines along with 130 TPH power boilers of Endritz ENMASS at 105 Kg/cm 2 pressure.

Facilities & Technologies

Multi fuel AFBC boilers with complete automated DCS operation and intelligent Load management system

Having infrastructure to receive 63 Kg / cm2 steam generated from recovery boilers running totally on black liquor effluent of Pulp process.

Infrastructure for export of power to PSEB and other states under open access.

Synchronization facility for the total network.

Coal Linkage


Segment Overview

Home Textile

Topline stood at Rs. 2,904.4 crore compared to Rs. 2,960.0 crore in

FY2015 Subdued yarn realizations and enhanced captive yarn

consumption moderated topline growth

EBITDA increased by 6% to Rs. 537 crore compared to Rs. 505 crore in

FY2015

EBITDA margin improved by 140 bps to 18.5% compared to 17.1% in

FY2015

Improvement in margin profile due to healthy margins in Terry Towel

business

Paper & Chemicals

Topline stood at Rs. 801.5 crore compared to Rs. 818.3 crore in

FY2015

EBIDTA higher by 10.2% to Rs. 262.9 crore from Rs. 238.6 crore in

FY2015

EBITDA margin improved by 360 bps to 32.8% as compared to 29.2%

in FY2015. Improvement in margins due to enhanced contribution

from valued-added copier paper

Revenue by Product (In Mn) FY 2010 FY 2013 FY 2014 FY 2015 FY 2016

Revenue 18,033.6 33,351.8 38,689.6 37,553.3 36,840.2 Textiles 10,957.5 13,091.2 26,122.4 30,458.0 29,654.6 Paper & Chemicals 3,023.1 4,942.4 7,217.7 8,357.5 8,191.0 Others 11.7 38.4 56.9

Revenue by Geography (In Mn) FY 2010 FY 2013 FY 2014 FY 2015 FY 2016 Revenue 18,033.6 33,351.8 38,689.6 37,553.3 36,840.2

India And Other Countries 8,829.9 12,806.1 24,555.3 29,489.0 29,551.2 USA 5,150.7 5,227.5 8,796.5 9,200.6 8,002.1

Business Segments in INR (2016)

Sales (M)

Textiles 29655

Paper & Chemicals 8191

Others 57

0

10000

20000

30000

40000

Sales (M)

Sales (M)


Tridents Milestones: 2015:

TEXPROCIL Award for Outstanding Export Performance 2014-15

Trident wins ECGC - D&B Indian Exporters’ Excellence Awards 2015

Trident wins Punjab State Safety Award – 2014: 2014

Trident Paper honored with NECA, 2014

Silver Trophy of prestigious "Niryat Shree" Award

TEXPROCIL Award 9th time

Inclusive Growth Award from Cisco 2013

Principal Partner - Bath by Sears Holdings Corporation 2012

Texprocil Award / Bronze / For Best Global Exporter(Overall)

Texprocil Award / Silver / Top performer in exports

CITI-Birla Award / HR Management in Textile Industry

Golden Peacock Award / Environment Management 2011

Texprocil Award / Silver / Highest exports in Terry Towels

JC Penney Innovation Award 2010

Rajiv Gandhi National Quality Award /Textile

Sustainability Award by IKEA / Trade Area South Asia

Texprocil Awards / Silver / Top performer in exports JC Penney Home Quailty Award / Best supplier of the year

2009:

Texprocil Awards / Gold / Highest exports in Terry Towels

IKEA Awards / Best supplier quality award-south asia

Government Of India / Star trading house for exports 2007:

SAP / Award for customer excellence

JC Penney Award / Supplier of the year 2006:

Walmart / International supplier of the year

National Award / Excellence in corporate governance

CITI-Birla Award / Quality management

Texprocil Outstanding Export Performance 2005:


ICAI Award / Excellence in financial reporting 2003:

Walmart / International supplier of the year 2001:


COMPANY PROFILE OF TRIDENT

Date of Incorporation 18-Apr-1990 Date of Listing 06-Jun-2001

Management Name Designation

S K Tuteja Chairman Rajinder Gupta Co-Chairman Rajiv Dewan Director Pallavi Shroff Director Deepak Nanda Managing Director

Registered Office Address Trident Group,Raikot

Road,148101,Barnala,Punjab,India Website

http://www.tridentindia.com


Company Financials

INCOME STATEMENT Mar-14 Mar-15 Mar-16

Net Sales/Income from operations

3,684.02 3,755.32 3,868.95

Other Operating Income 22.47 30.73 15.19

Total Income From Operations

3,706.49 3,786.05 3,884.14

Increase/Decrease in Stocks

-6.79 -93.65 22.4

Consumption of Raw Materials

1,726.30 1,971.17 1,941.54

Purchase of Traded Goods 14.68 53.32 88.13

Employees Cost 433.53 387.15 287

Depreciation 337.64 321.32 268.41

Other Expenses 797.36 776.56 802.27

Total Expenditure 3,302.72 3,415.87 3,409.76

Operating Profit 403.77 370.18 474.38

Other Income 9.19 3.74 1.11

P/L Before Int., Excpt. Items & Tax

412.97 373.93 475.5

Interest 136.41 205.96 210.32

P/L Before Tax 276.56 167.96 265.17

Tax 48.59 50.09 66.52

PAT 227.98 117.87 197.05

Share Of P/L Of Associates 1.13 -- -3.03

Net Profit/(Loss) For the Period

229.11 117.87 194.02

Prior Year Adjustments -- -- -1.61

Equity Share Capital 509.37 508.64 311.09

Reserves 1,209.53 946.71 573.73

EPS 4.46 2.47 6.33

WACC FY 2010 FY 2013 FY 2014 FY 2015 FY 2016

Equity

Cost of Equity 11.1% 10.0% 11.4% 12.0% 13.5%

Weight of Equity

15.3% 9.6% 19.7% 31.1% 46.3%

+ Debt

Cost of Debt 5.9% 6.6% 8.8% 7.5% 8.4%

Weight of Debt 84.7% 90.4% 80.3% 68.9% 53.7%

WACC 6.7% 6.9% 9.3% 8.9% 10.7%


Balance Sheet Highlights:

Net Worth doubled in 3 years

Long term and short term borrowing of Welspun India has gone down which is good for the Company

Balance Sheet ( In Mn) FY 2014 FY 2015 FY 2016

ASSETS

Cash And Equivalents 88.8 69.1 819.4

Short Term Investments 327.2 251.2 196.5

Total Cash & ST Investments 416.0 320.3 1,015.9

Accounts & Notes Receivable 2,641.4 2,033.3 1,767.3

Total Receivables 2,641.4 2,033.3 1,767.3

Inventories 6,428.5 7,507.8 9,092.0

Prepaid Exp. 22.0 22.0 -

Restricted Cash 8.3 20.2 -

Other Current Assets 1,614.1 2,468.6 3,195.7

Total Current Assets 11,130.3 12,372.2 15,070.8

Net Property, Plant & Equipment 18,189.2 30,601.7 38,918.7

Long-term Investments 851.5 112.0 2,647.8

Deferred Charges, LT - - -

Other Long-Term Assets 1,643.9 1,984.1 -

Total Assets 31,814.9 45,070.0 56,637.4

LIABILITIES

Short-term Borrowings 10,964.1 11,840.4 8,987.5

Accounts Payable 2,209.8 2,190.6 2,218.9

Other Current Liabilities 576.5 876.3 4,465.7

Total Current Liabilities 13,750.4 14,908.3 15,672.1

Long-Term Debt 7,658.6 13,961.0 21,365.0

Other Non-Current Liabilities 1,127.6 1,647.2 1,811.3

Total Liabilities 22,536.6 30,516.5 38,848.4

Additional Paid In Capital 4,326.7 8,415.0 5,693.7

Comprehensive Inc. and Other 4,951.6 6,138.5 12,095.3

Total Common Equity 9,278.3 14,553.5 17,789.0

Total Equity 9,278.3 14,553.5 17,789.0

Total Liabilities And Equity 31,814.9 45,070.0 56,637.4


Cash Flow ( In Mn) FY 2013 FY 2014 FY 2015

Net Income 493.1 1,940.2 1,178.6

Depreciation & Amort., Total 2,614.4 2,684.1 3,213.2

Other Non-Cash Adj 130.1 375.7 103.5

Changes in Non-Cash Capital (1,761.1) 434.6 (655.4)

Cash from Ops. 1,476.5 5,434.6 3,839.9

Capital Expenditure (883.5) (1,488.6) (2,164.7)

Sale of Property, Plant, and Equipment 86.1 143.4 27.4

Cash Acquisitions (58.2) (415.0) (0.2)

Proceeds from Investment - 4.2 60.2

Invest. in Marketable & Equity Securt. (58.2) (415.0) (0.2)

Other Investing Activities (121.5) 368.2 192.9

Cash from Investing (1,035.3) (1,802.8) (1,884.6)

Net Short Term Debt Issued/Repaid 2,317.1 (1,634.8) (182.9)

Long-Term Debt Issued 548.2 1,852.8 3,760.9

Long-Term Debt Repaid (3,420.1) (4,280.4) (5,544.1)

Total Debt Issued/Repaid (554.8) (4,062.4) (1,966.1)

Pref. Dividends Paid - (4.6) (485.7)

Total Dividends Paid - (4.6) (485.7)

Increase in CapItal Stocks 63.9 2.8 187.2

Other Financing Activities - 430.0 -

Cash from Financing (490.9) (3,634.2) (2,264.6)

Net Change in Cash (49.7) (2.4) (309.3)

Current Capitalization (Millions )

Share Price (inr) 48.6

Shares Out. 509.4

Market Capitalization (inr) 24,730.0

- Cash & Short Term Investments 1,015.9

+ Total Debt 30,352.5

+ Pref. Equity 0.0

+ Total Minority Interest 0.0

= Total Enterprise Value (inr) 54,066.6

Book Value of Common Equity 17,789.0

+ Pref. Equity 0.0

+ Total Minority Interest 0.0

+ Total Debt 30,352.5

= Total Capital 48,141.4


Ratios FY 2014

FY 2015

FY 2016

Profitability

Return on Assets 6.0% 3.1% 4.5%

Return on Capital 11.6% 7.2% 7.7%

Return on Equity 23.7% 9.9% 14.2%

Margin Analysis

EBITDA Margin 19.2% 17.6% 20.1%

EBIT Margin 12.3% 9.1% 11.0%

Earnings from Cont. Ops Margin

12.3% 9.1% 11.0%

Net Income Margin 5.0% 3.1% 6.2%

Normalized Net Income Margin

5.0% 3.1% 6.2%

Free Cash Flow Margin 10.2% 4.5% --

Asset Turnover

Total Asset Turnover 1.2x 1.0x 0.7x

Fixed Asset Turnover 2.0x 1.5x 1.1x

Accounts Receivable Turnover

15.6x 16.1x 19.4x

Short Term Liquidity

Current Ratio 0.8x 0.8x 1.0x

Quick Ratio 0.2x 0.2x 0.2x

Cash from Ops. To Curr Liab

0.0x 0.0x 0.1x

Avg. Days Sales Out. 23.4x 22.7x 18.9x

Long Term Solvency

Total Debt/Equity 200.7% 177.3% 170.6%

Total Debt/Capital 66.7% 63.9% 63.0%

LT Debt/Equity 82.5% 95.9% 120.1%

LT Debt/Capital 27.4% 34.6% 44.4%

Total Liabilities/Total Assets

27.6% 34.6% 40.9%

EBIT / Interest Exp. 2.53x 1.85x 2.96x

EBITDA / Interest Exp. 3.96x 3.59x 5.44x

Total Debt/EBITDA 2.50x 3.90x 4.09x

Net Debt/EBITDA 2.45x 3.85x 3.96x


Peer Comparison:

Current Capitalization in INR

Common Shares Outstanding (M) 509.37

Market Capitalization (M) 24,729.96

Cash and Equivalents (M) 1,015.89

Total Debt (M) 30,352.48

Preferred Equity (M) 0.00

Minority Interest (M) 0.00

Enterprise Value (M) 54,066.55

Company Name: TRIDENT LTD KPR MILL LTD WELSPUN INDIA HIMATSINGKA SEID

Latest Fiscal Year: 03/2016 03/2016 03/2016 03/2015

52-Week High 62.00 945.00 111.40 251.00

52-Week High Date 12/3/2015 5/17/2016 3/23/2016 5/3/2016

52-Week Low 22.05 546.00 47.00 74.05

52-Week Low Date 6/16/2015 6/12/2015 6/12/2015 6/9/2015

Daily Volume 328,841 10,036 1,435,427 228,367

Current Price: 48.55 909.85 99.85 221.60

52-Week High % Change -21.7% -3.7% -10.4% -11.7%

52-Week Low % Change 120.2% 66.6% 112.4% 199.3%

Total Common Shares (M) 509.4 37.7 1,004.7 98.5

Market Capitalization 24,730.0 34,285.8 100,321.8 21,818.1

Total Debt 30,352.5 8,147.4 25,608.7 7,562.9

Minority Interest - - 502.9 -

- Cash and Equivalents 1,015.9 457.0 1,776.5 261.9

Current Enterprise Value 54,066.6 41,976.2 124,656.9 28,484.0


Shareholding Pattern

Shareholding Pattern Mar-16 Dec-15 Sep-15 Jun-15 Mar-15

Promoter and Promoter Group (%) 66.51 66.56 66.58 66.57 66.60

Indian 66.51 66.56 66.58 66.57 66.60

Foreign NIL NIL NIL NIL NIL

Institutions (%) 2.55 2.47 2.29 2.20 2.33

FII NIL NIL 0.69 0.61 0.73

DII 2.55 2.47 1.60 1.58 1.60

NonInstitutions (%) 30.94 30.96 31.14 31.23 31.07

Bodies Corporate NIL NIL 19.29 19.60 19.79

Others 30.94 30.96 11.85 11.63 11.28

Custodians NIL NIL NIL NIL NIL

Total no. of shares (cr.) 50.94 50.90 50.88 50.88 50.86

Trident has NIL FII Investment currently and 30% of its share is trading in the market


Textile Industry Outlook Global textile industry Over the past 50 years, the global textile industry has witnessed

various geographical transitions, with the industry being mostly dominated by the United States, Japan, and Germany in the 1970s, and then by Taiwan, Indonesia, Korea and Thailand in 1980s, before finally shifting its base to China, India and other developing nations in 1990s. It is anticipated that this dominance will continue at a moderate pace over the years to come.

The global home textiles market is likely to grow its sales at a CAGR of 5.0% over FY12-17. The global market size of home textiles is likely to reach to USD 96 billion in FY17 from USD 74 billion in 2012. The global towel market size was at USD 16 billion in 2013, around 20% of the global home textiles market while the non-towel global market was at USD 62 billion. The bed linen market size in the US was at USD 14 billion in 2013, 54% of overall US home textiles market. The US and Europe together consume 79% of the global home textiles market.

Indian textile industry India, the world’s second largest producer of textiles and garments,

accounts for 63% of the market share of textiles and garments. Additionally, India accounts for about 14% of the world’s production of textile fibres and yarns (largest producer of jute, second largest producer of silk and cotton; and third largest of cellulosic fibre). The textile industry is projected to grow at a CAGR of 9% to USD 141 billion by 2021.

The US and the EU together account for two-third of India’s textile exports, which is projected to reach USD 38 billion y 2021. The textile industry contributes around 14% to the IIP, 5% to the country’s GDP, 27% to the Company’s forex inflows and about 13% to the country’s total exports earnings.

Further, it accounts for 21% of the total employment generated in the economy, providing direct employment to over 45 million people. Indirect employment including the manpower engaged in agro-based raw material production like cotton and related trade and handling employs around another 60 million. It contributes to around 8% of the total excise revenue collection. The textile sector accounts for about 24% of the world’s spindle capacity and 8% of global rotor capacity.


Indian Home Textile Industry India is globally recognized and appreciated for its wide variety and

exquisite designs in home textiles and furnishing fabrics. The country is on the verge of affordable housing sector boom and employment opportunities have been growing, especially in the services sector and hence disposable incomes are rising in the hands of young consumers. The combination of these factors has seen the demand for home textile products growing by a healthy 30-40% per annum over the last few years. India’s home textiles market is projected to grow at a CAGR of 10.5% to USD 9.9 billion in 2017 on account of increased exports growth at a CAGR of 8.4% to USD 6.0 billion in 2017.

Bed and bath linen together constitute about 67% of the home textile industry. The market for home textiles and furnishing fabrics in India is extremely wide and varied, in terms of prices, designs and colors..

The demand for better quality home textiles with features like stain-resistance, anti-inflammability, fragrance is increasing. India is poised to gain from the long-term growth in the global home textiles market, with large spinning capacities, which account for 9% of the global installed capacity and assured availability of raw material (cotton) at much lower costs (India’s raw material costs are lower than that of Pakistan and China’s, which are net importers).

With the US economy stabilizing and a labor cost advantage over China, India’s share in US exports of terry towels is likely to increase. India’s market share in towels in the US went up from 19% in 2009 to 36% in 2013 whereas China and Pakistan’s market share fell from 40% and 24% in 2009 to 25% and23% in 2013, respectively. India has the added advantage of being the largest producer of cotton and a net exporter over other major home textile suppliers, such as China, Pakistan and Turkey, which have higher cotton imports than exports. This gives India leverage over other nations in terms of raw materials availability and cost.

In US terry towel imports, India competes with China and Turkey as these countries are better placed in terms of designs and SKUs. Similarly, it competes with China and Bangladesh in EU terry towel imports. The Indian bed linen segment which constitutes 49% of the entire home textiles segment is projected to grow at a rate of over 9% CAGR to USD 7.3 billion by 2017 of which 60% is exported. The major export destination is US with 76% bed linen share. Cost advantage over peers in the US has helped India grab a market share of 46% by 2013 in the bed linen segment. India’s market share in EU by 2013 was 11%. The free trade agreement (FTA) between Pakistan and the EU for 8-9% free duty helped it gain a higher market share of 34% there over its peers including it leverage its products over peers, Turkey, Bangladesh, India and China.


Investment Rationale

Focus on optimally utilizing global scale capacities Significant Free Cash flows anticipated with major Capex cycle getting over On-track to significantly improve return ratios Cotton-to-Terry Towel and Cotton-to-Bed Linen: Fully integrated operations to deliver sustainable performance

over the years Branding strategy to target premium customer segment in Home Textiles and Copier segments Focus on Value-added products to further improve contribution over the coming years Strengthening presence in new markets like UK, Italy, France, Japan, Australia, South Africa and Canada Continue to target new markets to diversify customer base geographically Leverage existing customer

relationships to ramp-up Bed-Linen marketing Robust Free Cash flow generation expected going forward To reduce Long-term debt in a phased manner. Improve brand presence through multi brand outlets MBOs & Modern Retail across India Emphasis on emerging e-commerce platforms to market Home Textile brands – brands available across major e-

commerce platforms. Trident exports its textiles products to more than 60 countries across the globe, contributing 78% to the total

revenue of C 37,843 million. With the stabilization of its new towel facility at Budni in Madhya Pradesh and recent foray into bed linen,

Trident has become one of the largest integrated home textile producers in the world.

Mr. Rajinder Gupta, Chairman at Trident Group is very bullish on the prospects of the Company as: Trident reported

highest-ever EBITDA and PAT during the financial year. Trident’s EBITDA and Profit After Tax increased by 8% and 94% to

Rs. 751 crore and Rs. 228 crore respectively This was a result of Trident’s focus on expanding margins by improving

operational efficiencies and other strategic initiatives. During the year, Trident’s effort was on improving the penetration

of Trident’s home textile products in international as well as domestic markets through emphasis on marketing. The

roadmap for the coming year looks promising, as Trident’s global scale capacities is expanding in the Home Textiles

segment. All the initiatives and efforts undertaken by Trident’s marketing team would start delivering results in the

current year as we expect notable pick-up in volumes and ramp up in utilization levels. With major CAPEX in the last

financial years, strong financial performance in the coming years will enable Trident to generate significant free cash

flows, which we believe will create tremendous value for all Trident’s stakeholders.

We recommend BUY in Trident India @ 45 with the Target of 110 as Trident India is the

World’s Largest Manufacturer of Integrated Home textile and Wheat Straw based Paper.

https://www.dynamiclevels.com/en/trident-share-price-forecast


Disclaimer: Research Disclaimer and Disclosure inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014. Dynamic Equities Pvt. Ltd. is a member of National Stock Exchange of India Ltd. (NSEIL), Bombay Stock Exchange Ltd (BSE), Multi Stock Exchange of India Ltd (MCX-SX) and also a depository participant with National Securities Depository Ltd (NSDL) and Central Depository Services Ltd.(CDSL). Dynamic is engaged in the business of Stock Broking, Depository Services, Investment Advisory Services and Portfolio Management Services. Dynamic Equities Pvt. Ltd. is holding company of Dynamic Commodities Pvt. Ltd. , a member of Multi Commodities Exchange (MCX) & National Commodity & Derivatives Exchange Ltd.(NCDEX). We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered. SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor penalty on for certain operational deviations. Answers to the Best of the knowledge and belief of Dynamic/ its Associates/ Research Analyst who prepared this report

DYANMIC/its Associates/ Research Analyst/ his Relative have any financial interest in the subject company? No

DYANMIC/its Associates/ Research Analyst/ his Relative have actual/beneficial ownership of one per cent or more securities of the subject company? No

DYANMIC/its Associates/ Research Analyst/ his Relative have any other material conflict of interest at the time of publication of the research report or at the time of public appearance? No

DYANMIC/its Associates/ Research Analyst/ his Relative have received any compensation from the subject company in the past twelve months? No

DYANMIC/its Associates/ Research Analyst/ his Relative have managed or co-managed public offering of securities for the subject company in the past twelve months? No

DYANMIC/its Associates/ Research Analyst/ his Relative have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months? No

DYANMIC/its Associates/ Research Analyst/ his Relative have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months? No

DYANMIC/its Associates/ Research Analyst/ his Relative have received any compensation or other benefits from the Subject Company or third party in connection with the research report? No

DYANMIC/its Associates/ Research Analyst/ his Relative have served as an officer, director or employee of the subject company? No

DYANMIC/its Associates/ Research Analyst/ his Relative have been engaged in market making activity for the subject company? No

General Disclaimer: - This Research Report (hereinafter called “Report”) is meant solely for use by the recipient and is not for circulation. This Report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. The recommendations, if any, made herein are expression of views and/or opinions and should not be deemed or construed to be neither advice for the purpose of purchase or sale of any security, derivatives or any other security through Dynamic nor any solicitation or offering of any investment /trading opportunity on behalf of the issuer(s) of the respective security (ies) referred to herein. These information / opinions / views are not meant to serve as a professional investment guide for the readers. No action is solicited based upon the information provided herein. Recipients of this Report should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice and arrive at an informed trading/investment decision before executing any trades or making any investments. This Report has been prepared on the basis of publicly available information, internally developed data and other sources believed by Dynamic to be reliable. Dynamic or its directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information / opinions / views. While due care has been taken to ensure that the disclosures and opinions given are fair and reasonable, none of the directors, employees, affiliates or representatives of Dynamic shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including loss profits arising in any way whatsoever from the information / opinions / views contained in this Report. The price and value of the investments referred to in this Report and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance. Dynamic levels do not provide tax advice to its clients, and all investors are strongly advised to consult with their tax advisers regarding taxation aspects of any potential investment. Opinions expressed are our current opinions as of the date appearing on this Research only. We do not undertake to advise you as to any change of our views expressed in this Report. User should keep this risk in mind and not hold dynamic levels, its employees and associates responsible for any losses, damages of any type whatsoever. Dynamic and its associates or employees may; (a) from time to time, have long or short positions in, and buy or sell the investments in/ security of company (ies) mentioned herein and it may not be construed as potential conflict of interest with respect to any recommendation and related information and opinions. Without limiting any of the foregoing, in no event shall Dynamic and its associates or employees or any third party involved in, or related to computing or compiling the information have any liability for any damages of any kind. We and our affiliates/associates, officers, directors, and employees, Research Analyst(including relatives) worldwide may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company/company (ies) discussed herein or act as advisor to such company (ies) or have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of Research Report. Dynamic may have proprietary long/short position in the above mentioned scrip(s) and therefore may be considered as interested. The views provided herein are general in nature and does not consider risk appetite or investment objective of particular investor; readers are requested to take independent professional advice before investing. This should not be construed as invitation or solicitation to do business with Dynamic. Dynamic Equities Pvt. Ltd. are also engaged in Proprietary Trading apart from Client Business.

https://www.dynamiclevels.com/en/disclaimer

https://www.dynamiclevels.com/en/disclaimer

Report By: Surbhi Bagaria surbhi@dynamiclevels · Trident Ltd- A breakthrough in Textile Industry...

Documents

Transcript of Report By: Surbhi Bagaria surbhi@dynamiclevels · Trident Ltd- A breakthrough in Textile Industry...