Buy Trident Ltd For Target Rs37 By JM Financial Services
Trident reported consol. 2Q EBITDA of INR2.1bn, significantly higher than JMfe. The quarterly revenue for the home textile segment came in at INR19.1bn vs. INR18.4bn in CQLY, an increase of ~1.3% YoY. EBIT Margin for the segment came in at 7.6%, up 30bps YoY (7.3% in CQLY). The quarterly revenue in Paper & Chemicals segment came in at INR2.5bn vs. INR2.3bn CQLY, an increase of ~6% YoY. The EBIT margin for the segment declined significantly YoY by ~1100bps to 17.4% in 2Q. Consolidated EBITDA margin declined by 122bps (12.0% vs. 13.2% in CQLY) driven by higher RM costs vis-à-vis sales. Consol. PAT increased ~9% YoY to INR909mn from INR833mn in CQLY. During the quarter, company invested INR 2,500 mn in TGCL, a related party, through a fresh issue of equity shares by TGCL, constituting 30.42% stake in TGCL, based on independent valuation and Board approval dated September 2, 2025. Key margin initiatives taken by the company include a) developing differentiated products leveraging consumer behavior to earn premium b) catering to luxury, fashion accents and sports segments c) increasing CU of plants through digitization and adopting lean practices. We believe a relatively stable cotton price outlook and the Government of India’s continued focus on strengthening the textile ecosystem are likely to support earnings. Trident’s focus on innovative product pipelines, combined with possible positive tailwinds from India - UK FTA positions the company to capitalize on emerging opportunities. Maintain BUY
* Consol. margins decline YoY / QoQ amidst higher tariffs: Consol. revenue came in at INR17.8bn, up 4% YoY driven by higher revenue from Home Textile segment and Paper & Chemical segment (+6% YoY). Consol. EBITDA came in at INR2.1bn, significantly above our estimates driven by 4% growth in revenue amidst a higher tariff environment for Indian players. EBITDA was down 5% YoY driven by higher COGS. Consequently, EBITDA margin came in at 12.0%, down 122bps YoY. Consol. PAT increased ~9% YoY to INR909mn from INR833mn in CQLY. During the quarter, company invested INR 2,500 mn in TGCL, a related party, through a fresh issue of equity shares by TGCL, constituting 30.42% stake in TGCL, based on independent valuation and Board approval dated September 2, 2025.
* Segmental performance remains a mixed bag: The quarterly revenue for the home textile segment came in at INR19.1bn vs. INR18.4bn in CQLY, an increase of ~1.3% YoY. EBIT Margin for the segment came in at 7.6%, up 30bps YoY (7.3% in CQLY). The quarterly revenue in Paper & Chemicals segment came in at INR2.5bn vs. INR2.3bn CQLY, an increase of ~6% YoY. The EBIT margin for the segment declined significantly YoY by ~1100bps to 17.4% in 2Q.
* Strategic margin initiatives outlined: Key margin initiatives taken by the company include a) developing differentiated products leveraging consumer behaviour to earn premium b) catering to luxury, fashion accents and sports segments c) increasing CU of plants through digitization and adopting lean practices. We believe a relatively stable cotton price outlook and the Government of India’s continued focus on strengthening the textile ecosystem are likely to support earnings. Trident’s focus on innovative product pipelines, combined with possible positive tailwinds from recent US tariff revisions and India - UK FTA positions the company to capitalize on emerging opportunities.
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SEBI Registration Number is INM000010361
