Trident Q3 Review: Steady run continues

Textile and clothing

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26 Aug, 2025 12:21

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Krishna Karwa
Moneycontrol Research

Highlights:
-  Trident trades at reasonable valuations
-  Q3 numbers were good across segments
-  Home textile capacity utilisation is the key monitorable
-  Cotton costs and currency fluctuations are the main risks

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Trident (stock price: Rs 70.85, market cap: Rs 3,610.48 crore) reported good top-line traction and margin accretion in Q3 FY19. Higher capacity utilisation rates, long-term debt repayment, growing demand for paper products and an undemanding valuation make the stock a worthy pick.

Q3 analysis

Positives
-  Sales grew across all segments owing to healthy demand. Bed/bath linen grew 41.7/10.1 percent YoY, respectively
-  Overall gross margins expanded mainly due to a good product mix
-  Long-term debt reduced from Rs 1,688 crore as on FY18-end to Rs 1,428 crore as on end- Q3FY19
-  Higher other income led to improved net profit margins

Negatives
-  Employee costs and other expenses rose substantially year-on-year (YoY). This caused EBITDA margins to remain flat YoY

Observations

Revenue drivers
- In home textiles, the proximity of branding-cum-distribution teams to the US should aid volume growth
- Innovative value-added products will be launched in the branded bed and bath linen categories
- Paper prices have been on an uptrend because of supply constraints, which should help fetch higher realisations
- Global and domestic prospects in the home textiles market appear promising

Margin drivers-  Net debt (ie. debt minus cash) is likely to reduce further from Rs 2,197 crore as on December 31, 2018
-  The management aims to scale up utilisation levels at the bed and bath linen manufacturing facilities to 60-70 percent over the next 2-3 years

-  Higher captive utilisation of yarn output for home textiles will reduce dependence on external supplies
-  The product mix is shifting gradually in favour of private label brands
-  The contribution of high-value ‘Copier’ paper to the paper segment’s sales, which stood at 49 percent in 9MFY19, will increase in due course

Risks
- Adverse currency fluctuations and steep raw material (cotton) prices may impact exports/gross margins, respectively
-  Order cancellations or delay in executions thereof (in home textiles) would cause utilisation rates to remain low, thus resulting in lower profitability
-  Heavy capex by paper players to add new capacities could lead to moderation in margins because of lower realisations

Outlook
The stock, despite a sharp 34 percent rally from its 52-week low, trades at 8 times its FY21 projected earnings.

Therefore, one shouldn’t overlook this investment opportunity.

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