MOSL: TRIDENT (Buy)-In-line quarter-strong performance in FY19
Trident: In-line quarter; strong performance in FY19
(TRID IN, Mkt Cap USD0.5b, CMP INR64, TP INR81, 26% Upside, Buy)
- Largely in-line performance…: TRID's revenue increased 18.5% YoY to INR14.1b (our estimate: INR13.4b) in 4QFY19. EBITDA margin shrank 20bp YoY to 18.1% (our estimate: 18.1%). EBITDA adjusted for forex gain increased 17.2% YoY to INR2.5b (our estimate: INR2.4b). Adj. PAT was up 64.3% YoY to INR895m (our estimate: INR873m). For FY19, consol. revenue grew 15.1%, with the margin expanding 210bp to 20.1%. Consol. adj. PAT increased 71.2% in the year.
- …with strong contribution by all segments: Volumes increased strongly in both the bed linen (+39.4% YoY) and bath linen (+6.5% YoY) segments in 4QFY19. Notably, in FY19, utilization improved to 63% for bed linen (FY18: 44%) and 49% for bath linen (FY18: 45%). Paper revenue grew 25% YoY in the quarter on account of a better product mix and price increases, which translated into segmental margin expansion of 940bp YoY to 37%. TRID remains confident of sustaining this momentum, supported by its plans to expand capacity by 48,482MTPA in yarn at an investment of INR11.4b (expected commissioning by Jan'21), primarily to provide backward integration support to enhanced utilization in the bath and bed linen segments.
Trident Limited is a terry towel, yarn and wheat straw-based paper manufacturer. The Company's segments include Textiles, Paper and Chemical/Chemicals, and Others. The Company's geographical segments include USA and Rest of the world. The Textiles segment includes yarn, towel, bed sheets and dyed yarn manufacturing (including utility service). The Paper and Chemical/Chemicals segment includes paper and sulfuric acid (including utility service). The Others segment includes sale of software and related services. The Company's product portfolio includes solid bath ensembles, beach towels, embroidered towels, bath mats, bathrobes, printed bed linen, duvets, duvet covers, cushion covers, viscose blended yarn, core spun yarn, bamboo/cotton yarn, dyed bed linen set, micro modal/cotton blended yarn, drawing paper, and Bible and offset print paper. Its brands include Trident Spectra, Trident My Choice and Trident Natural. It has manufacturing facilities in Punjab and Madhya Pradesh.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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