MOSL: TRIDENT (Buy)-Sharpened by realization improvement across key segments
TRIDENT: Sharpened by realization improvement across key segments; Textile volumes impressive; mix/price increase drive paper segment
(TRID IN, Mkt Cap USD0.5b, CMP INR71, TP INR94, 33% Upside, Buy)
- Revenue/EBITDA in line, PAT exceeds estimate: TRID's revenue grew 18% YoY to INR12,914m (our estimate: INR12,923m) in 3QFY19. EBITDA adjusted for forex loss increased 21% YoY to INR2,427m (our estimate: INR2,339m). EBITDA margin expanded 50bp YoY to 18.8% (our estimate: 18.1%), largely driven by inventory gain and better realizations. Adj. PAT grew 74.8% YoY to INR945m (our estimate: INR849m). For 9MFY19, revenue/adj. PAT grew 12.8%/78.3% YoY, with margin expansion of 310bp YoY to 20.9%.
- Growth momentum intact: Volumes grew strongly in both the bed linen (+41.7% YoY) and bath linen (10.1% YoY) segments. Realization, too, was up by a healthy 15%/8% YoY in bed/bath linen. In the paper segment, a better product mix and price increases more than offset the impact of the 10% YoY volume decline, resulting in overall value growth of 15.7% YoY (implying ~26% YoY realization growth). The only drag to the margins came from yarn due to a decline in the spread (as cotton cost rose ~10% YoY, but realization increased merely by 5% YoY).
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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