Big News: Textile Sector is Booming and Trident is Leading the Way: Here’s Why ?

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Why Trident Share Price is Rising and What You Should Know

Trident Ltd. is one of the leading textile companies in India, with a diversified portfolio of products such as yarn, home textiles, paper, and chemicals. The company has a market capitalization of ₹ 18,625.72 crore and a share price of ₹ 37.3 as of September 1, 2023. The share price has increased by 47.5% from its 52-week low of ₹ 25.05, and is close to its 52-week high of ₹ 41.92. What are the factors behind this impressive performance and what are the prospects for the future? Let’s find out.

Strong Demand from Global Retailers

One of the main reasons for the rise in trident share price is the strong demand from global retailers such as Walmart, Target, and Costco for its home textile products. Trident is one of the largest suppliers of towels and bed sheets to these retailers, and has been able to maintain its quality and delivery standards despite the challenges posed by the Covid-19 pandemic. The company has also benefited from the shift in consumer preference towards online shopping, which has boosted the sales of its e-commerce partners.

According to a report by ICICI Direct, Trident’s home textile segment is expected to grow at a compound annual growth rate (CAGR) of 15% over FY21-23E, driven by higher volumes and better realization. The report also stated that Trident has a strong order book visibility for the next six months, which gives confidence in its revenue growth.

Lower Raw Material Costs

Another factor that has contributed to the increase in trident share price is the lower raw material costs, especially cotton. Cotton is the main raw material used in the textile industry, and its price has a significant impact on the profitability of textile companies. According to the Cotton Association of India, the cotton prices have declined by 10% in August 2023 compared to July 2023, due to higher production and lower demand. This has resulted in lower input costs and higher margins for Trident and other textile players.

Trident has also taken steps to reduce its dependence on cotton by increasing its product mix of blended yarns, which have higher value addition and better margins. The company has also invested in backward integration by setting up its own captive power plants and paper mills, which help in reducing its energy and packaging costs.

Attractive Valuation and Dividend Yield

The third factor that makes trident share price attractive is its valuation and dividend yield. Despite the recent rally, Trident is still trading at a lower price-to-earnings (PE) ratio of 46.95 compared to its peers such as Welspun India (PE of 58.77) and Indo Count Industries (PE of 64.76). This indicates that Trident is undervalued and has scope for further upside.

Trident also offers a decent dividend yield of 0.98%, which is higher than the industry average of 0.67%. The company has a consistent track record of paying dividends since FY16, and has increased its dividend payout ratio from 10% in FY16 to 25% in FY21. This shows that Trident is committed to rewarding its shareholders with regular dividends.

Conclusion

Trident Ltd. is a well-established textile company that has shown strong growth in its home textile segment, driven by robust demand from global retailers. The company has also benefited from lower raw material costs, especially cotton, which have improved its margins and profitability. Trident also offers an attractive valuation and dividend yield, which make it a compelling investment option for long-term investors.

Disclaimer: The content on this website is for informational and educational purposes only and is not intended as investment advice or to provide any financial recommendations. Sharemarket-buzz.com is not responsible for any losses or damages caused by your use of the information on this website. You should do your own research and analysis before making any investment decisions based on the content on this website. Sharemarket-buzz.com does not endorse or recommend any products, services, or companies mentioned on this website.

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