Share India Securities Ltd, a
leading knowledge and technology driven stock broker, recommends buying Trident
Ltd shares for a target of Rs 150 in the next 1 year.
Share India says “Trident reported
its Q2 FY18 results which were in line with our expectations given GST teething
problems and implementation issues for the same. The revenue was flat y-o-y at
INR 11,549mn (vs. 11,600mn in Q2) – without any excise duty effect. On a
segment basis the revenue for both Textile and Paper business was flat. PAT was
however, below our expectations with reported figure at INR 493.9mn (vs. our
expectation of INR 756mn). The drop in PAT was mostly due to higher COGS which
led to lower gross margin.
The textile business which has significant geographic dispersion
was majorly impacted with segment profit dropping approximately 40% y-o-y for
Q2 FY18. Trident also saw considerable increase in trade receivable (up 20% 6M
FY18) and drop in inventories (down 30% 6M FY18).
We attribute increase in raw material prices and sudden change in
working capital policies entirely to GST and maintain long term positive for
Trident. Tridents performance on all other parameters was in line with our
expectations including drop in financial borrowings and healthy balance sheet
ratios.
We maintain buy on Trident and keep constant FY18E EPS of INR 8
and maintain TP 150.
Trident is set to benefit from multiple factors – rising share of
India in global textile exports and expanding share of high margin products
like bed linen/copier paper and higher backward integration.
We estimate sales CAGR of 10% over FY18-20E and PAT CAGR of 25%
over FY18-20E, with improving RoE to 20% in FY20. We value Trident at 15x FY19E
EPS (owing to high operating cash flows and premium product mix) of INR 10,
arriving at a TP of INR150.
We initiate coverage with BUY. Trident Ltd's operations are
segregated into four main segments viz. yarns, terry towels, paper and
chemicals. The product offering of the company includes yarns segment: 100%
cotton yarn (Grey/Dyed/Mercerized), Single & TFO Doubled, Hosiery &
Weaving (Combed & Carded), etc. Terry towels: Piece-dyed dobbies, yarn-dyed
single and double jacquards, uni-dyed jacquards, etc. Paper segment: Spectra
copier - ultra-finish, highspeed Copier Paper, goldline surface swize maplitho,
etc”
About Share
India Securities Ltd
Share India Securities Ltd, engaged in the business
of equity broking, investing and trading activities for the last 24 years,
became 200th SME Company to get listed on BSE SME Platform on 5th October 2017.
The company in addition to providing the services as a Depository Participant,
Research Analyst, Mutual Fund Advisor/Distributor, has also filed an
application with Securities and Exchange Board of India for the registration of
Company as a Portfolio Manager.
The Company has received many Awards and Recognitions
some of them are, an award for appreciation for our contribution in the 1
crores Demat accounts opened by CDSL. Company has been accredited with
certificate for being among the top performing members for the year 2015-16 in
equity and equity derivatives segment of the National Stock Exchange of India
Limited. Company has been accredited with certificate for being among the top
performing members for the year 2015-16 in Currency derivative segment of the
National Stock Exchange of India Limited.
For more information, please contact: Mr. Aryan Prem Rana, AARYANA MATASCO
Email ID: info@aaryanamatasco.com www.aaryanamatasco.com
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