Trident LtdQ4 FY20Textiles & Apparels

Trident Ltd

Q4 FY20 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

1 of 4 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

Future Growth Expectations for Trident Ltd: - EBITDA margins expected to be around 18% to 22% sustainably. - Revenue growth anticipated at 10% - 15% year on year for FY20 & FY21. - Bed Linen sales volume grew 41.7% Y-o-Y; Bath Linen grew 10.1% Y-o-Y. - Target utilization levels for FY20: Bed Linen ~75% (+/-5%), Bath Linen ~60% (+/-5%). - Marketing initiatives planned to improve capacity utilization and customer acquisition include: - Exploring white spaces in retail matrix. - Introducing differentiated, innovative products. - Tailored strategies for new customers. - Strengthening US team and closer customer engagement. - Competitive pricing to sustain growth. - Small maintenance CAPEX (~INR 100 crores per year) for capacity upgradation ongoing. - Stable cotton prices expected unless affected by geopolitical trade issues. - Efforts underway to grow US distribution and product branding to sustain growth momentum.

Margin guidance

Category 3

→The company expects sustainable EBITDA margins around 18% to 22%.
→Revenue growth is projected at 10% to 15% year-on-year.
→Q3 FY19 saw a profit after tax of INR 112.1 crores with EPS of INR 2.20.
→The company targets continued growth driven by volume and realization increases, especially in the Home Textile segment.
→Strategic initiatives in product innovation, US market expansion, and capacity utilization improvements are aimed at sustaining growth.
→Small maintenance CAPEX of approximately INR 100 crores annually supports operational efficiencies.
→Stable cotton prices are expected to support cost management unless geopolitical trade issues arise.
→Overall outlook indicates steady earnings and margin growth from FY20 onwards.

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Fundraise plans

Yes

→No significant new CAPEX other than approved captive co-generation Steam (2 x 150 TPH) and Power Plant (2 x 30 MW) facility in Budni, Madhya Pradesh.
→Financial closure and legal documentation completed for a Power Project in Budni; disbursement as of 31 December 2018 is Nil.
→Expected drawdown of about INR 150 crore by end of FY20 for this project.
→Small maintenance CAPEXs (~INR 100 crore annually) continue for de-bottlenecking and capacity upgrades.
→No mention of new equity fundraising; focus is on manageable debt with Net Debt to Equity ratio at 0.7x as of December 2018.

Order book

→The demand for Paper has been robust at the beginning of the publishing season in India (Q3 & Q4 FY19), with order book showing healthy growth.
→There is optimism to sustain growth in the Home Textile business going forward, suggesting a strong order pipeline.
→Specific figures for the current or expected order book/pending orders are not explicitly provided in the document.
→The company expects to continue surpassing guidance on revenue and margins, indicating positive order inflow and backlog.
→The focus on US distribution expansion, product development, and innovation supports expectation of increasing orders.
→Overall, the order book appears strong, particularly in Paper and Home Textile segments, although exact quantification is not disclosed.

Capex plans

→No significant CAPEX planned for FY19/FY20 other than implementation of captive co-generation steam (2 x 150 TPH) and power plant (2 x 30 MW) facility in Budni, Madhya Pradesh; Board approved with details provided in Q1 FY19 release.
→Ongoing small maintenance CAPEXs such as de-bottlenecking/upgradation of capacities amounting to approx. INR 100 crores per year.
→Expect drawdown of about INR 150 crore by end of FY20 for power project in Budni.
→Focus on strategic investments in US distribution: enlarged team, product development & innovation, improved product functionality, and branding initiatives to sustain growth.
→Emphasis on customer acquisition and capacity utilization through reviewing retail white spaces, differentiated products, tailor-made strategies for new customers, stronger US team, and competitive pricing.

How does Trident Ltd rank vs peers in Textiles & Apparels?

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