Trident Ltd-A Safe & High Potential Multibagger (CMP64.75)

For more info check, http://www.tridentindia.com/

NUMBERS – THE LATEST

Market cap: 3271 crores CMP on Day 17 Sept 2018: Rs 64.75 BV: 57 Apx
Revenue FY18: 4557Cr Net profit FY18: 263cr FV: 10

POSITIVES

1. Trident has a well established global business, with clients across 100 countries. the company clearly thinks big and is an excellent example of “make in India”
2. The company has the capacity to manufacture 360 million towel pieces and 7.5 million bed sheet sets per annum for the global market. ~
3. Paper manufacturing is a significant part of the business. It enjoys the highest operating margins among key listed players in India.
4. The company recently incorporated a wholly-owned subsidiary in the UK to strengthen its marketing channels in Europe
5. Trident has been able to grow its revenues at 22 %CAGR, From 47Cr Revenue in 1995 to over 4670Cr in FY18 which shows management stride towards growth.
6. Continuous focus on debt repayment:-Company has reduced its long-term Debt from 3421Cr in FY16 to 2381Cr in FY18. Another Reduction in Long-Term Debt in Q1FY19 of INR 65 Crore; Net Debt reduced by INR 240 Crore.
7. The company had recently gone into a massive expansion of capacity and its major Capex cycle has been completed, and with recent debt reduction, the company would be able to generate a great amount of cash from its operations, which in turn would improve dividends payouts.

INTERESTING INFO

1. Trident is a preferred supplier to some of the global retail giants like Walmart, JC Penny, IKEA, and Target. It also supplies to large hotels like Taj and Oberoi.
2. The company has signed Kriti Shanon to endorse its new Bed and Linen collection. The company has brands in various quality and price categories.
3. Trident went into a licensing agreement to launch an exclusive range of home textiles under the world-renowned French lifestyle brand ELLE DECOR in India, which is also related to the world’s largest selling fashion magazine, ELLE. A Clear Indication of management to bring premium and high margin products into its product offering which would be responsible for the next leg of growth for Trident.
4. Within two years of operation, Company is able to scale up its Bed Linen capacity utilization to 55% (Q1FY19) by leveraging its existing relationship with terry towel customers.
5. Crisil has upgraded the short-term credit rating to CRISIL A1+ from CRISILA1 and the Long-term rating has been reaffirmed at CRISIL A+/Stable.
6. Recently stock fell from 110 to 55 due to MTM Forex Losses and Destocking of Trident products by its Retailers. However, MTM forex losses are one-time impact and Restocking has recently seen in 2 Qtrs and would improve further in coming qtrs. All in all, both these factors are currently priced in for trident @ 65.
7. The current capacity utilization of bed linen is at 55% and Terry Towel at 45% which provides enough room to play on its operating Leverage incoming 6-10 Qtrs.
8. Recently promotors have bought 34 Lakh shares between 61-66 from the open market during 28Aug and 3Sept.

1. Trident major revenues come from the US, any adverse Duty tariffs imposed by the US would impact the business. The recent trade war between the US and China would actually prove helpful to Indian textile exports, However, we need to keep in check if there are any adverse duty tariffs imposed on Indian textile imports from the US.
2. Trident has been able to snatch market share from other competitors in the recent past, however, any loss in market share in the future would impact the business for Trident.
3. Adverse Currency Fluctuations and Adverse Cotton Price movements will impact margins.