Trident Q2FY18 Concall Summary



Financial Highlights

Trident Q2FY18 Financial Performance.png
  • Total Sales at Rs. 952 crores in Q2FY18 compared to Rs.942 crores in Q2FY17.
  • EBIT declined by 65% to Rs. 36 crores in Q2FY18 compared to Rs. 102 crores in Q2FY17.
  • EBIT Margin stood at 3.7% in Q2FY18 vis-à-vis 10.9% in Q2FY17.
  • Cash generated from Operations reached to Rs. 623 Crore in H1FY18 and PAT toRs. 198.8 crores.

Debt and Repayment

  • Debt declined by around Rs. 380 crores in H1FY18.
  • Targeted decline for FY18 is Rs. 450 crores, which is expected to be met easily.
  • Long Term Debt came down by Rs. 359 Crore in H1FY18, including High Cost Debt of INR 163 Cr.
  • Interest Cost came down by 17% Y-o-Y in H1FY18.
  • The Interest Coverage ratio stands at 7.2x in H1FY18.
  • The Credit ratings for the Long-Term Bank Facilities have moved higher to AA- from A+ and the Short-Term Bank Facilities to A1+ from A1.
  • Dun and Bradstreet upgraded business rating of Trident Ltd from 5A2 to 5A1, which is the highest achievable level and indicates minimal risk and high degree of credit worthiness.

Segment-wise Performance 

Textile Segment:

Trident Q2FY18 Textile Business Performance.png
  • Widened spreads between spot and forward prices of cotton and yarn prices impacted profitability adversely, but have now been stabilized.
  • Volume Sales in BathLinendipped by 11% Q-o-Q due to uneven vendor procurement cycle and change in product mix.
  • US market share for BathLinen is about 12%-13%.
  • Volume growth in BedLinenwas healthy at 23% with sales growth of 30% Q-o-Q, while volume growth in Bed Sheetswas about 35%
  • Bed Sheet is not yet at break-even point; expected to reach it in H2FY18.
  • For Bed Linen, the realizations have improved by 6% Q-o-Q.
  • Volume de-growth in Towel is about 12%.
  • For Towel, half-year to half-year realizations improvement is around 2%-3%.
  • Overall, the result is 9%-10% decline in Towel segment.
  • Proportion of captive yarn consumed is 40% in Q2FY18.
  • Captive Consumption of Yarn volume increased by 24.6% in H1FY18 compared to H1FY17, bringing down product price risks.
  • In domestic business, revenues grew at a healthy rate of 24% Y-o-Y to Rs. 157 crores in H1FY18 due to presence in around 450 Multi-Brand Outlets and e-commerce platforms.

 Paper Segment:

Trident Q2FY18 Paper Business Performance.png
  • Adverse impact of GSTwas witnessed in Q1 and Q2, leading to decline in Sales by 7% on Y-o-Y to Rs. 204 crores in Q2FY18 compared to Rs. 218 crores in Q2FY17.
  • However, Utilization has improved to 87% in Q2FY18 from 83% in Q1FY18.
  • Q-o-Q price decline in Paper segment is around 4%-5%.
  • EBIT has increased by 76% to Rs. 76 crores Q-o-Q while EBITDA Margin stood at a healthy rate of 48%.
  • The reasons are higher efficiencies and locational advantage (within 40-50 km radius) for Wheat Straw (main component of raw material) in Punjab.
  • However, sustainable margins are 36% to 40%.

 ROSL and Duty Drawback

  • ROSL has been reduced from 3.9% to about 1.9%.
  • Duty drawback is now kept at 2% along with the input credit.
  • Another Bed and Bath business incentive is MEIS which is around 2%.
  • On an overall basis, its impact to is 2% on the Bed & BathLinen margin.
  • Going forward, this 2% impact will be only 1% on EBITDA on the company has a whole.
  • An increase in efficiency and volumes is expected to offset this impact and ensure that margins to continue to grow.

 Utilization Capacity Guidance for FY2019

Trident Capacity Utilization Q2FY18.png
  • 60% for Towel.
  • 50%-60% for Bed Linen.
  • 90% for Paper.

 Hedging Position

  • Current hedging position is about 30% to 40% of theestimated export revenue.
  • There was a hedging gain in this quarter.