1. Company & Business Strength: 9/10
The company started as a Chemical plant (Single super phosphate) in 1985, and once profitable it started a Yarn production segment. The Business went well with a very small margin profit, thus when management decided to start finishing products with in-house raw materials (yarn) for lower cost and high margin.
The company started with Bed sheets and Bath towels, and again when the business stabilized they entered to Paper Business.
Despite knowing the competitive business of Paper and raw material fluctuations (Wood), trident planned to produce paper with Wheat straw in Punjab and its largest wheat paper producer based on wheat straw.
The company also entered Energy and planning to enter into FMCG soon.
Trident Vision- Inspired by the challenge, we will add value to life, and together, prosper globally.
Trident has been a beneficiary of the china plus one & Aatmanirbhar Bharat initiative.
It has clients such as Amazon, H&M, Target, Max, Kohl's, Myer, Kmart, Ikea JCPenney, cK, and many others, and is trusted by Walmart, Flipkart, amazon, Metro, Big Bazaar, Dmart, Reliance market, Myntra and many.
It has a customer base in 150+ Countries.
Business Segment:
Bath & Bed:
Contains several brands of Bed and bath linen under segments such as Luxury, Premium, Essential, Collections, and Gifting.
Products such as bedsheets, Bath towels, pillow covers, etc, and its exports to clients.
The bath and Bed segment contributes to 51% of revenue.
Yarn:
Started in 1993 in Punjab, it is an eminent player in high-performance knitting and weaving yarn.
Yarn is key for trident since it's used for Bath and Bed too. The company also exports yarn.
The yarn segment contributes to 30% of revenue.
Paper:
The company is producing paper in the name Trident Spectra, natural, etc for office papers, and notebooks.
The paper segment contributes to 19% of revenue, and it's very profitable too due to wheat straw and its low-cost availability of them in Punjab.
Energy:
Generate captive power to meet energy requirements in-house using boilers.
FMCG:
Planning to launch soon.
2. Competitive Strength: 9/10
Trident Ltd is a Textile company, it has competition with others like Welspun, Garware Tech, Go Fashion, Jindal Worldwide, TCNS clothing, Raymond, and other spilling companies.
3. Stock Analysis Return & PE Ratio: 10/10
Trident Ltd Stock is listed both in NSE, and BSE and currently trading around 52 (Jan 2022), with 52 highs of 59s and lows of 12s.
It has a market cap of 26000+ which is Midcap, Stock has been consolidating for a long time over the year until after 2020 it gave multifold returns.
The stock has given a 244% return in the last 3 years which is exceptional.
The face value is 1, so expect a bonus and buybacks.
PE Ratio: Trident Ltd has a PE of 40 currently which is fair compared to sector PE.
4. Dividend: 8/10
The stock has been giving a good dividend of 0.68%. Generally, we expect a growing company to give atleast 1% dividend which is a good gesture and sign unless high Capex is planned.
Financial Ratios:
5. Sales Growth/Revenue: 3/10
The Sales growth indicates that the company can capture the market, and which may increase profitability.
Trident has a 3-year median Sales growth of -0.34% which is poor. Current year (2021) growth stands at -3.83%. For Small caps, we consider the growth of atleast 20%+ as healthy sales.
6. Profit Growth: 6/10
Sales growth indicates a good income, but unless profit is not made it's terrible. Profit growth indicates how expenses are managed or also how the company has pushed the raw material prices to end customers.
Trident Profit growth stands at a 3-year median of 9.15% which is poor, Current year stands at 1.15%. For Small cap, atleast 20-25+% is considered as healthy growth in Profitability.
7. [ROE] & [ROCE] %: 5/10
Return on Equity:
ROE indicates the ability to generate profits from shareholders/Equity Investments. Trident ROE has a 3-year median of 11.93%. The current year stands at 11%.
We consider a healthy ROE to be atleast 20% for growth companies.
Return on Capital Employed:
ROCE indicates the ability to use its capital employed for business. Trident ROE has a 3-year median of 11.02%. The current year stands at 10.59%.
We consider a healthy ROCE to be atleast 20% for growth companies.
8. Debt/Equity: 7/10
D/E is a measure of which a company is running through debts vs owned funds. Ideally, D/E should be less than 1, which indicates stability.
Trident has a D/E of 0.46 which is a bit high. Unless capital expansion or any other is required, a low debt is always good to maintain profitability.
We consider debt-free or D/E<0.1 to be healthy.
Note: Company has reduced debt recently.
9. Shareholding %: 9/10
The company has a high Promotor holding of 73.02%. The FII and DII of 2.14% and 0.93% indicate Institutions have very less holding, the Remaining area Public.
Note: The Promoter Pledging % is 0% which is good, generally no pledging indicates a good sign.
Another indicator like interest coverage ratio, Return on Assets[ROA], and others also seems good.
10. Future Prospects: 9/10
Pros:
Good Exports and a good number of Clients and partners majorly been the USA.
The competitive advantage of lower-cost production is due to in-house yarn and globally competitive due to lower wage costs.
Diversified business from textile to paper to energy and entered into FMCG.
Trident has been a beneficiary of the china plus one & Aatmanirbhar Bharat initiative.
High promoter holding, and good dividend.
Exceptional stock returns in the last 3 years.
Cons:
Highly concentrated on USA exports (85%+), but trying to diversify to Europe and domestic.
Poor Revenue growth in last 3 years.
Fair profit growth, ROE, and ROCE in the last 3 years.
Investment Hacks Score Card:
The average score of Trident based on all factors comes to be 7.6/10.
Conclusion:
Overall Trident Limited seems to have a good diversified Business in many areas & planning to expand business too. Although not very good financially, the company has been handling competitive businesses such as textile and paper very well due to in-house raw materials and low cost.
The stock has given good returns to shareholders too. Since this is Mid cap stock, Investors can see volatility in the future and should carefully watch future plans and growth.
Disclaimer:
Since this is an educational opinion, Please research thoroughly or consult your financial advisor before Investment.
Hope you found this analysis useful. please share this with others if you found this useful. Please wait for other stocks/crypto analyses which will be available soon!.
Happy Investing!.
Team Investment Hacks
.png "Trident Stock")
Comments
Post a Comment