Trident Limited – Long-term rating upgraded to “CRISIL AA / Stable”, short-term rating reaffirmed
CRISIL Ratings has upgraded its rating on the long-term banking facilities of Trident Ltd (Trident) to “CRISIL AA / Stable” from “CRISIL AA- / Positive”. The rating of short-term facilities and commercial paper has been reasserted to ‘CRISIL A1 +’.
The rating action reflects Trident’s expectation of continued healthy business performance and a strong financial risk profile. The company’s risk profile continues to improve with visible traction in the home textiles segments, both in sheets and towels, resulting in better capacity utilization. The strong increase in demand for home textiles is due to an ever longer period of stay and the attention paid by consumers to health and hygiene. The financial risk profile remains solid with robust regularizations and a phased capital expenditure plan (capex). The company has reduced its debt from Rs 1952 crore as of March 31, 2020 to Rs 1,536 crore as of March 31, 2021 through advance payments from internal accrual accounting, controlled capital expenditure as well as non-factoring initiatives. appeal.
Capacity uses in the cotton yarn segment also reached 97% in the first quarter of fiscal 2022, higher than pre-Covid levels, in part due to increased captive consumption for product production home textiles as well as the strong rebound in demand for cotton yarn and achievements in the industry. The paper segment also accelerated, albeit gradually, with utilization levels improving to 85% in the first quarter of the current fiscal year. In fiscal year 2022, aggregate revenue is expected to grow by more than 20%, due to the weak revenue base of last year, the continued pull of home textiles and cotton yarn, the recovery in the paper segment, as well as the commissioning of the planned capacity addition. In addition, operating profitability is expected to remain above 20%, also supported by the implementation of incentives for the reimbursement of public and central taxes and levies (RoSCTL) and thanks to the benefit of a higher scale.
The company plans to undertake capital expenditure of Rs 1400-1500 crore in the medium term which will be financed by debt of approximately Rs 1000 crore. The repayment obligations for these loans are retroactive, which will support the overall financial risk profile and liquidity. Net debt / earnings before interest, depreciation, taxes and amortization (EBIDTA) is expected to remain less than 1.5 times for FY2022 compared to 1.4 times for FY2021 and stay close to 1x in the medium term. The liquidity profile remains healthy, supported by cash and cash equivalents of over Rs 200 crore and unused bank limits of Rs 1,000 crore in June 2021.
The business profile remains healthy, marked by the fact that Trident is the second largest player in the home textiles and yarn manufacturing segments in India, in addition to being a leading manufacturer of writing paper and writing paper. printing (WPP) in North India. The rating continues to reflect Trident’s diversified revenue profile with a leading position in the home textiles market and an established position in WPP, strong operational efficiency driven by integrated operations and a strong financial risk profile. These strengths are partially offset by exposure to cotton price volatility and exchange rate fluctuations (forex), high working capital intensive operations and susceptibility to end-user market downturn and downturn. competition in the home textiles segment.
Shares of Trident Ltd were last trading in BSE at Rs. 26.75 from the previous close of Rs. 25.75. The total number of shares traded during the day was 8,472,309 in more than 20,422 trades.
The stock hit an intraday high of Rs. 27 and an intraday low of 25.3. The net turnover during the day was Rs. 222301990.