Trident targets home textile-led growth as yarn spreads lift first-quarter margins
Trident Ltd.
HOLD
₹25
₹24.18
₹28
12.00%
Investment View and Valuation
Motilal Oswal Financial Services reiterated a Neutral rating on Trident with a target price of Rs 28, based on 12x FY28E EV/EBITDA. The current market price was Rs 25 as of the report dated July 21, 2026.
The broker expects growth to be led principally by a recovery in the home textile portfolio. Improved utilisation, recovery in home textile realisations and premiumisation into fashion towels, fashion bedding and top-of-bed categories are expected to support the outlook. Operating leverage and vertical integration should contribute to a gradual improvement in margins.
1QFY27 Operating Performance
Trident reported 1QFY27 revenue of Rs 17.9 billion, up 4.7% year on year but 2.2% below Motilal Oswal's estimate. Paper and yarn drove revenue growth during the quarter, while home textiles remained weak.
| Business segment | Share of sales | 1QFY27 growth |
|---|---|---|
| Home textiles | 43% | Muted overall |
| Bath linen | 29% | Flat year on year |
| Bed linen | 14% | Down 2% year on year |
| Yarn | 44% | Up 6% year on year |
| Paper | 14% | Up 14% year on year |
Quarterly gross margin contracted 60 basis points year on year to 50.6%. However, EBITDA increased 7% year on year to Rs 3.1 billion, with the EBITDA margin expanding 30 basis points to 17.3%, despite a 4.7% increase in employee expenses. EBITDA was 25.6% above the broker's estimate of Rs 2.5 billion, supported by better cotton-yarn spreads.
Adjusted PAT increased 21.7% year on year to Rs 1.7 billion, compared with Motilal Oswal's estimate of Rs 1.2 billion. The board declared an interim dividend of Rs 0.5 per share.
| Segment | 1QFY27 EBIT margin | Key observation |
|---|---|---|
| Paper | About 17.6% | Highest segment EBIT margin |
| Bed linen | About 16.3% | — |
| Yarn | About 15.3% | Supported by better spreads |
| Bath linen | About 5.3% | — |
Growth Outlook and Estimates
Motilal Oswal forecasts a 16% FY26–FY28 CAGR for home textiles, driven by higher demand from lower tariffs, improving realisations and premiumisation. It expects yarn revenue to grow at a 6% CAGR and paper revenue at a 7% CAGR over the same period.
The broker models consolidated revenue, EBITDA and PAT to grow at CAGRs of 11%, 17% and 29%, respectively, between FY26 and FY28. Its estimates project improving EBITDA margins and adjusted PAT through the forecast period.
| Metric | FY27E | FY28E |
|---|---|---|
| Revenue | Rs 75.6 billion | Rs 83.1 billion |
| EBITDA margin | 14.0% | 14.5% |
| Adjusted PAT | Rs 5.2 billion | Rs 6.5 billion |
The report shows no changes to FY27E or FY28E revenue, EBITDA, PAT or EPS estimates.
Business Trends Behind the Neutral View
Trident's home textile portfolio recorded a low-single-digit sales decline over FY22–FY26, while yarn and paper sales were flat over the same period. This performance backdrop remains an important factor supporting the Neutral view, despite the expected recovery in home textiles and the recent improvement in yarn spreads.
Key Risks
- Raw-material price volatility.
- Tariff risks in US markets.
- A slowdown in export markets.
Disclaimer: This is a summary of a research report published by the broker/research house identified above. The views, recommendations, target prices and estimates are those of the respective broker and do not represent DSIJ investment advice. The summary may be AI-assisted, hence please refer to the original report for complete details, disclosures and risks.
