Shares of Trident, the flagship company of the Trident Group, fell sharply in early trade on Thursday after the company reported disappointing numbers for the March quarter. The textile fabric manufacturer posted a 27.62% YoY fall in its consolidated Q4 net profit to ₹131 crore.
Revenue from operations fell 15.37% to ₹1,563 crore during the quarter, compared to ₹1,847 crore in the corresponding quarter of the previous fiscal. Its revenue from the yarn segment has dropped significantly to ₹728 crore from ₹1,097 crore registered in Q4FY22.
While the revenue from its towel and bedsheets segments also witnessed a yearly drop of 1% and 3.74%, respectively. The paper & chemicals business, however, reported 22.27% growth in Q4 to ₹339 crore.
On the operating front, the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fourth quarter came in at ₹269 crore, registering a decline of 20.5% YoY compared to ₹338 crore in the year-ago period.
For the fiscal year ended March 2023, Trident’s net profit fell 47% to ₹442 crore. It reported a net profit of ₹834 crore in FY22. Its consolidated revenue from operations fell by 9.5% to ₹6,332 crore in FY23.
In response to the weak Q4 numbers, the stock slumped nearly 7.62% to ₹32.10 apiece. The scrip has been on a downward trajectory since hitting an all-time high of ₹70.35 apiece in January 2022, reaching ₹25.75 per share at the end of March, reflecting a 63% loss in value.
However, in April, the stock broke its downward trend and gained momentum, closing the month with an impressive 11.27% increase. This positive shift occurred after the company released its March production update, which revealed a strong month-on-month growth of up to 15% in the production volume of its home textile and paper, and chemical divisions.
Earlier in February, JM Financial, a global brokerage firm, said that the company is well positioned to capitalize on several structural drivers that contribute to increased market share, such as the US ban on Xinjiang imports, duty reimbursement by the Government of India, and market share gains in line with the China+1 strategy.
Additionally, potential free trade agreements (FTAs) with the UK and EU could expand the company's addressable market in the long term. However, the near-term demand environment for the textile segment is expected to remain subdued due to recessionary concerns and inventory build-up at retailer levels, it added.
JM Financial maintained a 'buy' rating on Trident shares and set a target price of ₹40 apiece.
Trident is a leading manufacturer of yarn, bath linen, bed linen, wheat straw-based paper, chemicals, and captive power. The company operates through two segments: textiles, and paper and chemicals.
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