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Revenue up 4.7% YoY; margins improve with better spreads

Trident’s (TRID) revenue grew 4.7% YoY to INR17.9b in 1QFY27. The home textile portfolio had muted growth in both the towels and bedsheet segments. The yarn and paper segments grew 6% and 14%, respectively. Gross margin contracted 60bp YoY to 50.6% for 1QFY27, while EBITDA margin settled at 17.3% (30bp YoY). We expect TRID’s revenue growth to continue at ~11%, led by the home textile portfolio driven by:

1) improving utilization levels

2) recovery in home textile realizations

3) growth into premium categories, followed by the yarn and paper segments. We expect margins to improve gradually toward 14-15%, aided by operating leverage and vertical integration benefits. The board has declared an interim dividend of INR0.5 per share.

Paper and yarn segments drive revenue

TRID’s revenue grew 4.7% YoY to INR17.9b in 1QFY27. The home textile portfolio (43% of sales) saw muted growth in both its categories. Bath linen, accounting for 29% of the portfolio, delivered flat growth, while bed linen, accounting for 14% of the portfolio, declined 2% YoY. Yarn (44% of sales) delivered a 6% YoY growth, while the paper segment (14% of sales) delivered a 14% YoY growth. We expect the home textile portfolio to deliver a 16% CAGR over FY26-28, driven by higher demand due to lower tariffs, improving realizations, and premiumization with a focus on categories such as fashion towels, fashion bedding, and top-of-bed categories. Yarn sales are expected to deliver a 6% CAGR over FY26-28, while the paper segment is likely to deliver a 7% CAGR over FY26-28.

EBITDA margin improves due to better cotton yarn spread

In 1QFY27, gross margin contracted 60bp to 50.6%. EBITDA grew 7% to INR3b, with EBITDA margin at 17.3% (+30bp YoY), despite an increase in employee expenses (4.7% YoY). APAT grew 21.7% to INR1.6b. Paper delivered the highest EBIT margins at ~17.6%, while in the home textile portfolio, bed and bath EBIT margins stood at ~16.3% and ~5.3%, respectively. Yarn delivered robust EBIT margins at ~15.3%, driven by better cotton yarn spreads. We expect EBITDA margins to gradually improve to 14-15%, led by operating leverage and vertical integration benefits.

Valuation and view: Reiterate Neutral

TRID’s home textile portfolio, comprising bath & bed linen, delivered a lowsingle-digit decline over FY22-26, while yarn and paper segment sales remained flat over FY22-26. We expect the home textile portfolio to clock a 16% CAGR over FY26-28, driven by lower tariffs, while yarn and paper are likely to post a 6% and 2% CAGR, respectively, over the same period. We model a revenue, EBITDA, and PAT CAGR of 11%, 17%, and 29%, respectively, over FY26-28, fueled by growth in the home textile business, followed by the yarn and paper portfolios. We reiterate our Neutral rating with a TP of INR28 (valuing the stock at 12x FY28E EV/EBITDA). Key risks: raw material price volatility, tariffs in the US markets, and slowdown in export markets (refer to our IC note dated Jun’26)

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