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Chola Securities
Trident (Buy)
CMP: ₹70.85
Target: ₹90
Trident’s revenue grew by 18 per cent y-o-y to ₹1,290 crore; Textile revenue grew by 18.6 per cent y-o-y to ₹1,030 crore, aided by strong in the home textile segment and Paper revenue grew 15.7 per cent y-o-y to ₹259 crore. Bed linen revenue grew 41.7 per cent y-o-y, aided by 33.3 per cent y-o-y increase in volume and 8.4 per cent y-o-y increase in realization. Bath linen grew 10.1 per cent y-o-y, aided by volume growth of 12.2 per cent y-o-y, while realisation de-grew by 2.1 per cent y-o-y.
We introduce FY21 estimates and we expect revenue, EBITDA and EPS to grow at a CAGR of 6.7 per cent, 8 per cent and 13.9 per cent, respectively, between FY19-21E, as the operating and financial leverage plays out. As the company has completed all major capital expenditures, we estimate the cumulative FCF generated between FY19-21E would be around ₹2,090 crore i.e. about 58 per cent of current market capitalisation, which provides a good margin of safety.
Risks: Loss in market share in terry towel segment, adverse price movement in currency and cotton prices and withdrawal of export schemes by GoI.
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