Trident extends gain, surges 13% in two days; stock nears 52-week high

The stock is trading close to its 52-week high of Rs 75.60 touched on January 15, 2019 on the BSE.

Shares of Trident were up 5 per cent to Rs 74.50 on Tuesday, surging 13 per cent in past two days on the back of heavy volumes in an otherwise subdued market. The textile company's stock is trading close to its 52-week high of Rs 75.60, touched on January 15, 2019.

Till 09:45 am, a combined 1.35 million equity shares changed hands on the counter on the NSE and BSE. In comparison, the S&P BSE Sensex was down 0.15 per cent at 40,742 points.

While announcing the July-September quarter (Q2FY20) results on November 2, the Trident management had said that accelerated growth, higher spending power with customers in US and currency support will help the company to deliver better results going forward for its home textile business.

Also, as per SBI Trade Report, the ongoing trade war between China and the US has been moderately beneficial to India as the cotton imports from US to China have declined whereas imports from India have gone up, it added.

In Q2FY20, the company’s Ebitda (earnings before interest, tax, depreciation and amortisation) margin improved 27bps at 19.5 per cent. However, profit before tax during the quarter declined 4 per cent at Rs 147 crore over the previous year's quarter.

The Company has demonstrated high resilience by having increased capacity utilizations in the bath & bed linen segment, generating industry leading margins in the paper business, improving cash flows and following prudent capital allocation policy by reducing debt, the report said.

“The company targets to deliver 60/70 per cent FY20 utilisation across bath/bed segments, 18-22 per cent EBITDA margin across businesses. Capex trajectory is likely to eat into free cash flow (FCF) generation for years to come while growth will continue to depend heavily on currency depreciation and subsidies. Declining cotton prices (13 per cent YTD) and currency hedges @ 72 for FY20 lends support to earnings,” analysts at JM Financial said in result update. The brokerage firm maintains ‘buy’ rating on the stock with 12 month target price of Rs 96 per share.

Meanwhile, the stock will turn ex-date for stock split in the ratio of 1:10 on December 13, 2019. The board of directors of Trident at its meeting held on May 13, 2019, had recommended split/ sub-division of equity shares of the company from the existing face value of Rs 10 to Re 1 per equity share.