Initiating Coverage | 23 August 2017

Sector: Textile

Trident

Utilization

TRIDENT is a three-pronged weapon, which, among

other things, represents three energy sources that

combine to create a positive outlook.

An attractive utilization play

Niket Shah - Research analyst

(Niket.Shah@MotilalOswal.com); +91 22 3982 5426

Aksh Vashishth - Research analyst

(Aksh.Vashishth@MotilalOswal.com); +91 22 6129 1553

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Trident

Contents: Trident Ltd. | An attractive utilization play

Summary ............................................................................................................. 3

Company overview............................................................................................... 6

Home Textiles – the key to improved profitability ................................................. 8

Branded copier paper to drive margins ............................................................... 11

Culminating capex cycle...................................................................................... 13

Earnings to post 24% CAGR over FY17–20 ........................................................... 15

Valuation and view............................................................................................. 17

Bull & Bear case

................................................................................................. 19

Industry overview .............................................................................................. 21

Key risks............................................................................................................. 24

Management overview....................................................................................... 25

Financials and valuations .................................................................................... 26

23 August 2017

2

Trident

Initiating Coverage | Sector: Textiles

Trident

Buy

BSE Sensex

31,292

S&P CNX

9,766

CMP: INR82

TP: INR114 (+39%)

Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

M.Cap. (INR b)

M.Cap. (USD b)

1, 6, 12 Rel. Per (%)

Avg Val, (INR m)

Free float (%)

Financial Snapshot (INR b)

Y/E Mar

2017 2018E

Sales

47.4

52.2

EBITDA

8.9

9.9

NP

3.4

4.2

EPS (INR)

6.6

8.3

EPS Gr (%)

39.3

25.2

BV/Sh (INR)

54.1

60.5

RoE (%)

13.0

14.5

RoCE (%)

7.5

9.0

P/E (x)

12.4

9.9

P/BV (x)

1.5

1.4

Shareholding pattern (%)

As On

Promoter

DII

FII

Others

TRID IN

509.4

92/45

41.7

0.7

-3/9/62

129

32.2

2019E

57.1

11.1

5.3

10.4

25.5

68.6

16.1

10.9

7.9

1.2

Trident (TRID) is one of India’s leading diversified group of businesses headquartered

in Ludhiana, Punjab. The company is one of the world’s largest manufacturers of

integrated home textile (bed and bath linen) and the largest manufacturer of wheat

straw-based paper. In FY17, the Home Textile business contributed 82% of its overall

revenue, while Paper accounted for 18%. It has manufacturing plants at Budni (MP)

and Barnala (Punjab) with combined installed capacity of 115mn kg of yarn, 175k MT

of paper, 90MT of bath linen and 43m mtrs of bed linen. TRID also owns the world’s

largest compact yarn spinning unit under single roof.

An attractive utilization play

Increasing utilization and entry into bed linen – the key growth drivers





Jun-17 Mar-17 Jun-16

67.8

2.1

1.5

28.6

67.8

2.2

1.6

28.5

66.5

1.6

1.0

30.9



Home Textile contributes 82% of TRID’s revenues. Improving productivity and

operating efficiencies are expected to significantly boost utilization in this

segment over the coming years (65% utilization in its stronghold bath linen v/s

current level of 50%, and 60% utilization in the recently forayed bed linen v/s

current level of 29%). The focus on value-added products should help the

company improve realization impressively in Home Textile.

Paper accounts for 18% of its revenues. The company has presence in copier

paper (~60% of TRID’s Paper sales volume), which is among the top-selling brands

in India and commands high margins. TRID plans to implement a debottlenecking

project to release capacity of 250-275 TPD, improving capacity utilization and

allowing further expansion in the copier segment. Increased focus on copier

paper is expected to expand TRID’s Paper margin by 340bp to 38% in FY20E.

We estimate a CAGR of 9% in revenue and 24% in PAT over FY17-20, driven by

EBITDA margin expansion of 110bp and lower interest expense. We value the

stock at 11x FY19E EPS. We initiate coverage with a Buy rating and a target price

of INR114, implying 39% upside.

Margin expansion in Paper business led by copier

Copier paper is among the top selling brands in India and commands high

margins. Copier paper contributed 45% of Paper sales volume in FY13, which

increased to 60% in FY17. The company intends to leverage strong growth in

copier paper in India (CAGR of ~8% v/s ~4% in other paper and stationery) to

improve Paper realization and margin (+340bp to 38% in FY20E).

An attractive utilization play

Trident

Enhanced profitability led by bed linen

The company most recently ventured into bed linen, with installed capacity of

43m meters. In the first year of operations, bed linen had 29% utilization, and

the company expects to ramp-up operations by adding new clients. TRID has

already added more than 10 clients in FY18 so far, including large replenishment

clients like IKEA and Amazon. Bed linen currently posts EBITDA loss, which is

expected to turnaround by 3QFY18 as utilization reaches 40%. We believe new

customer acquisition and the expanding share of TRID in the global textile

market should help the bed linen segment increase utilization to 60% in FY20.

Niket Shah

+

91 22 3980 5436

Niket.Shah@motilaloswal.com

Please click here for Video Link

23 August 2017

3

Trident

Stock Performance (1-year)

Bath linen (towel) inching toward higher utilization

TRID is the market leader in the towel segment in India, and accounts for a

significant part (32%) of Indian towel exports to the US. The company used to run at

high utilization of 74% in FY13, which declined thereafter as TRID invested heavily in

capex and nearly doubled its capacities from 42MT to 90MT to make itself future-

ready. Since there would be no further capex, the company expects the plants to

return to higher utilization, resulting in margin expansion (as yarn capacity would be

utilized in-house and no further spinning capacity would be required). Capacity

utilization is expected to reach 65% in FY20E from the current level of 50%.

Rising share of India in global home textile market

In terry towel category, India accounts for 40% of the global market, which has

increased at 15% YoY. India also commands the third largest market share in the

Asia-Pacific home textile market, and is expected to grow fastest in the world at a

CAGR of 7.2% over 2015-2020. The growing share of India in the global home textile

market puts TRID in a sweet spot to garner more market share (evident from the

increase in the company’s market share in towel exports to the US, from 10% in

CY14 to 13% in CY16), particularly in bath linen, where it is the domestic market

leader.

Robust free cash flow generation with major capex cycle behind

In FY16, the company executed greenfield expansion, with total outlay of INR7.5b

for 1.9 lac spindles capable of producing compact yarn up to 120 counts. The

initiative was taken to attain 100% backward integration for the bed linen unit. The

company is not expected to invest heavily in expanding capacities, but is rather

likely to improve efficiencies by initiatives such as debottlenecking, which would

result in better capacity utilization and thus steady generation of free cash flows in

both Paper and Home Textile segments.

23 August 2017

4

Trident

Valuation and view

TRID appears to be at the onset of a high growth cycle, driven by:

1. Growth in bed linen segment:

The company is expected to turn EBITDA

profitable in the recently ventured bed linen segment by 3QFY18 as utilization

touches 40%. In the first year of operations, bed linen witnessed utilization of

29%, which is expected to increase to 60% in FY20. Also, the segment’s share in

overall revenue is expected to increase from 4% in FY17 to 9% in FY20.

2. Higher utilization in bath linen:

TRID used to run at high utilization of 74% in the

towel segment in FY13. However, utilization declined thereafter as the company

almost doubled its capacity in the segment from 42MT in FY13 to 90MT in FY15

to make itself future-ready. Going forward, the company is expected to witness

higher utilization (65% in FY20E v/s 50% in FY17), which would not require

further addition of spindles as yarn capacity would be utilized in-house.

3. TRID’s rising share in global market:

The share of Indian companies in the global

textile market is on the rise as the country is becoming highly competitive in

terms of raw material cost, labor cost and level of automation, leading to

improved quality. TRID has been proactive in capitalizing on this opportunity,

leading to an increase in the company’s share in global towel exports to the US

(from 10% in CY14 to 13% in CY16). Also, the company’s share in Indian towel

exports to the US has also increased from 28% in CY14 to 32% in CY16.

4. Paper biz margin driven by branded copier paper:

TRID has consistently

increased its share of copier paper over the years. Copier paper contributed 45%

of the company’s overall Paper sales volume in FY13, which increased to 60% in

FY17. Since, copier paper commands high margins, we expect Paper business

margin to expand 340bp to 38% in FY20.

We believe TRID is set to benefit from multiple factors, including industry growth

and expanding share of bed linen/copier paper. Hence, we estimate 9% sales CAGR

and 24% PAT CAGR over FY17-20, with improving RoCE and RoE (from 7.5% and 13%

in FY17 to 13% and 17.1% in FY20, respectively). IND AS adjustment recognized on

fair valuation of PPE to the tune of INR7,582m has resulted in a depressed return

ratios, with RoE and RoCE standing at 18.3% and 8.6% in FY17 pre-adjustment v/s

13% and 7.5% in FY17 post-adjustment. Consequently, pre-adjusted RoE and RoCE is

expected to increase to 21.4% and 15.1% in FY20E respectively. We value TRID at

11x FY19E EPS, arriving at a TP of INR114, implying 39% upside. We initiate coverage

with

Buy.

23 August 2017

5

Trident

Company overview

India’s leading integrated home textiles and paper manufacturer

Trident (TRID) is one of India’s leading diversified group of businesses

headquartered in Ludhiana, Punjab. The company is the world’s largest wheat

straw-based paper manufacturer, has world’s largest compact yarn spinning unit

under single roof and is among the world’s largest integrated home textile

manufacturers.

Home Textiles business contributed 82% of its overall revenues in FY17, while Paper

accounted for 18%.

TRID was incorporated in 1990 as a yarn manufacturer. It gradually expanded into

towels in 1998 and also set up a paper manufacturing facility. Most recently, the

company ventured into bed linen (part of Home Textile), marking a shift from a

pure-play yarn player to an integrated home textile and paper manufacturer.

Exhibit 1: TRID’s journey since inception

Source: Company

Significant presence in both domestic and export markets

TRID has a strong presence in both domestic and export markets. As of FY17,

exports contributed 89% of revenue in the bed and bath linen, 32% in yarn and 9%

in paper. On the other hand, the domestic market contributed 91% of revenue in

paper, 68% in yarn, and 11% in bed and bath linen.

The US remains the primary market for the company’s flagship towel business (bath

linen). TRID’s share in Indian towel exports to the US stands at ~32%, while its share

in global towel exports to the US stands at ~13%.

23 August 2017

6

Trident

Client reach

Exhibit 2: TRID’s international clientele

Source: Company

Exhibit 3: TRID’s domestic clientele

Source: Company

Exhibit 4: TRID’s online clientele

Source: Company

23 August 2017

7

Trident

Home Textiles – the key to improved profitability

Fully integrated process across units

Homes Textile is the largest revenue contributor for TRID. The company has fully

integrated manufacturing processes, which provide strong control over the

production value chain. The company has plants in Budni (MP) and Barnala (Punjab).

TRID has one unit with capacity of 300 looms and 48k MT per annum (p.a.) in Budni,

and three units with capacity of 388 looms, 42k MT p.a. in Barnala for bath linen. For

bed linen, there is one unit with capacity of 500 looms and 43.2m meters p.a. in

Budni.

Capacities for bed and bath linen are vertically integrated by installed capacities for

yarn, for which there are five units with capacity of 3.7lac spindles and 2,880 rotors

in Budni, and five units with capacity of 1.8lac spindles and 3,584 rotors in Barnala.

Exhibit 5: Fully integrated manufacturing process

Source: Company

23 August 2017

8

Trident

Better product mix in bed linen and improved utilization to drive growth

TRID ventured into the bed linen segment in FY17 (installed capacity of 43m meters)

to leverage on the strong customer base in bath linen (towel). In the first year of

operations, bed linen had 29% utilization – the company expects to ramp up its

operations by capturing new clients and drive profitability via top-line growth.

The company has already added more than 10 clients in FY18 so far in the segment,

including large replenishment clients like IKEA and Amazon. As of now, the company

is servicing small orders from the large players to test capability and quality; it

expects to gradually leverage the same to bag large orders. Led by its full backward

integration in the segment, the company is well placed to service clients by having

full control over production quality.

Bed linen segment accounts for the largest share in the Indian and global home

textile markets. It is globally pegged to grow at a CAGR of 4.4% over 2015-20, while

the Indian bed linen and bed spread market is expected to witness much higher

CAGR of 7.4% over this period.

For TRID, bed linen currently posts EBITDA loss, which is expected to turnaround by

3QFY18, as the segment reaches utilization of 40%. Driven by new customer

acquisition and expanding share of TRID in the global textile market, we expect

utilization in bed linen to eventually increase up to 60% in FY20. Additionally, the

company manufacturers bed sheets of 200 counts, which are expected to be scaled

up to higher counts to penetrate further into the market. Higher count provides

higher realization without requiring any additional capacity or modification in the

manufacturing unit. We expect bed linen realization CAGR of 13% over FY17-20 to

INR209m/MT.

Exhibit 7: Bed linen to post 44% revenue CAGR over

FY17-20E

Revenue (INRm)

69%

Growth (%)

Exhibit 6: Bed linen’s utilization set to improve

Installed capacity (mn mtrs)

50%

40%

29%

Utilization (%)

60%

38%

30%

43

FY17

43

FY18E

43

FY19E

43

FY20E

1,800

FY17

3,035

FY18E

4,172

FY19E

5,408

FY20E

Source: Company, MOSL

Source: Company, MOSL

23 August 2017

9

Trident

Bath linen (towel) inching toward higher utilization

TRID is the market leader in India’s towel segment, and forms a significant part

(32%) of Indian towel exports to the US. The company used to run at high utilization

of 74% in FY13; however, it declined thereafter, as TRID invested heavily in capex

and nearly doubled its capacities from 42MT to 90MT, making itself ready for future

opportunities. Since there would be no further capex, the company expects the

plants to run at higher utilization, which would result in margin expansion, as yarn

capacity would be utilized in-house and no further spinning capacity would be

required.

Exhibit 9: Bath linen to post 12% revenue CAGR

over FY17-20E

Revenue (INRm)

26%

14%

0%

15%

3%

13%

13%

11%

Gr (%)

65%

Exhibit 8: Bath linen’s utilization set to improve

74%

Installed capacity (MT)

67%

41%

50%

54%

Utilization (%)

60%

38%

42

FY13

42

FY14

90

FY15

90

FY16

90

FY17

90

90

90

FY13

FY14

FY15

FY16

FY17

FY18E FY19E FY20E

Source: Company, MOSL

FY18E FY19E FY20E

Source: Company, MOSL

23 August 2017

10

Trident

Branded copier paper to drive margins

India’s only wheat straw-based paper manufacturer

TRID is the world’s largest and India’s only wheat straw-based paper manufacturer.

The company has two units with capacity of 175k MT p.a. in Barnala (Punjab), which

contribute ~18% of its overall revenue. The company uses wheat straw (residue left

after harvesting wheat, which typically wheat farmers sell for extra income) for

manufacturing paper, which provides it with a locational advantage as Punjab is the

highest wheat producing state in the country (facilitates easy procurement at

attractive pricing). Additionally, the use of wheat straw is environment friendly.

With production capacity of 450TPD, TRID saves 8,100 trees per day by using wheat

straw instead of wood. This, in turn, results in a reduction of 5,520lbs of CO2

emissions per 1,000 reams of paper produced.

The manufacturing facilities are technology advanced as well, with TRID being the

first mill in the world to use ECF bleaching and oxygen delignification on wheat

straw and the first mill in India to adopt fuzzy logic for burner management in lime-

kiln, in-house QC and R&D lab.

Product mix skewed toward high-growth copier paper

TRID’s Paper business contributes ~18% of overall revenues. The high-growth, high-

margin branded copier paper accounts for ~60% of its sales volume. The company

intends to further increase the share of branded copier and leverage on the

industry-wide growth in the segment. Copier paper in India is witnessing a CAGR of

~8% v/s ~4% in other paper and stationery.

Exhibit 10: Paper product mix in FY13

Exhibit 11: Paper product mix in FY17

Non-

copier

55%

Copier

45%

Non-

copier

40%

Copier

60%

Source: Company, MOSL

Source: Company, MOSL

With 47 distributors pan-India and customer presence across 54 countries, TRID

commands the highest market share in north India, and is the fourth largest player

in India. Easy procurement at attractive pricing as discussed earlier also provides

multiple sourcing alternatives. With production capacity of 450TPD, TRID is set to

augment its market share further.

23 August 2017

11

Trident

Going forward, the company plans to carry out a debottlenecking project to release

capacity of 250-275 TPD, which would improve its utilization, allowing further

expansion in the copier segment. Copier paper, being among the top-selling brands

in India and also providing higher margins, is expected to drive overall Paper

business margin expansion of 340bp to 38% in FY20.

Additionally, there is no new capacity coming up industry-wide on account of huge

barriers to entry (e.g., environment clearance as government stresses on a zero

disposal plant; heavy capex; replacement cost of a paper manufacturing plant is as

large as ~INR20b and takes ~4 years for commercial launch). This will lead to higher

capacity utilization while capturing growth in the segment.

Exhibit 12: Paper units to run at high utilization level

Installed capacity (mn mtrs)

89%

87%

87%

88%

89%

Utilization (%)

90%

90%

90%

175,000

FY13

175,000

FY14

175,000

FY15

175,000

FY16

175,000

FY17

175,000

FY18E

175,000

FY19E

175,000

FY20E

Source: Company

Exhibit 13: EBITDA margins in Paper business to expand

EBITDA

27%

28%

Margins (%)

29%

29%

35%

37%

38%

38%

1,944

2,302

2,390

2,400

3,020

3,325

3,413

3,465

FY13

FY14

FY15

FY16

FY17

FY18E

FY19E

FY20E

Source: Company

23 August 2017

12

Trident

Culminating capex cycle

Robust free cash flow generation expected as major capex cycle gets over

TRID in the recent past has invested heavily to expand and carry out backward

integration for its existing capacities. In FY16, the company executed greenfield

expansion with total outlay of INR7.5b for 1.9 lac spindles capable of producing

compact yarn up to 120 counts. The initiative was taken to attain 100% backward

integration for the bed linen unit.

Going forward, the company is not expected to invest heavily in expanding

capacities. In the paper segment too, there is no new capacity coming up industry-

wide on account of huge barriers to entry (e.g., environment clearance as

government stresses on a zero disposal plant; heavy capex; replacement cost of a

paper manufacturing plant is as large as ~INR20b and takes ~4 years for commercial

launch).

The company is rather expected to improve efficiencies by undertaking initiatives

like debottlenecking, which would result in better capacity utilization in both Paper

and Home Textile. Utilization in yarn is expected to increase to 98% in FY20 from

current levels of 93%, while in Paper utilization is likely to rise marginally to 90% in

FY20 from 89% now. Utilization in bed and bath linen is expected to increase to 60%

and 65% in FY20 from current levels of 29% and 50%, respectively.

Exhibit 14: Robust free cash flow generation expected

FCF (INRm)

6,123

3,005

3,652

9,192

8,428

9,432

7,427

(5,926)

FY13

FY14

FY15

FY16

FY17

FY18E

FY19E

FY20E

Source: Company, MOSL

23 August 2017

13

Trident

SWOT analysis



Easy availability of

wheat straw as raw

material

Prestigious and loyal

customer base

Market leader in

terry towels in India

Ventures into faster-

growing bed linen

segment





Cyclical nature of

paper industry

Highly competitive

market



Expansion into value-

added product

segments

Emerging overseas

market and rising share

of Indian companies



Government

regulations and

uncertainty over duty

structure

Growing competition

putting pressure on

profitability











23 August 2017

14

Trident

Earnings to post 24% CAGR over FY17–20

EBITDA margin to expand by 110bp

We expect PAT CAGR of 24% over FY17–20, led by 9% CAGR in revenue due to ramp-

up of the bed linen segment (as the business turns EBITDA profitable) and steady

growth in the bath linen and paper businesses. Additionally, 11% EBITDA CAGR over

the same period would aid growth in PAT.

Revenue growth would be driven by 44% revenue CAGR in bed linen and steady

revenue CAGR of 12% in bath linen.

Exhibit 15: Revenue to post 9% CAGR over FY17–20…

Revenues (INRm)

22%

16%

28%

10%

-3%

-2%

1,800

FY17

3,035

FY18E

4,172

FY19E

5,408

FY20E

10%

8%

38%

30%

Gr. (%)

Exhibit 16: …driven by 44% revenue CAGR in bed linen

Revenues (INRm)

69%

Gr. (%)

33,726 39,096 38,018 37,112 47,438 52,164 57,122 61,677

FY13

FY14

FY15

FY16

FY17

FY18E FY19E FY20E

Source: Company, MOSL

Source: Company, MOSL

We expect EBITDA margin to expand by 110bp to 19.8% in FY20, as the company

continues to improve its product mix toward higher-value products, especially in the

paper and bed linen segments. PAT margin is expected to expand from 7.1% in FY17

to 10.4% in FY20 on account of deleveraging of balance sheet, as the company

continues its efforts to turn debt-free.

Exhibit 17: EBITDA to register CAGR of 11% over FY17–20

EBITDA (INRm)

16.5%

18.6%

17.4%

19.7%

EBITDA (%)

293%

Exhibit 18: PAT to record CAGR of 24% over FY17–20

PAT (INRm)

Gr. (%)

18.7% 19.0% 19.4% 19.8%

5,553

FY13

7,276

6,608

FY15

7,297

8,882

12,212

9,911 11,082

493

1,940

FY14

105% 3,372

39%

1,179

-39%

2,421

FY15

FY16

FY17

25%

4,221

25%

5,297

21%

6,401

FY14

FY16

FY17

FY18E FY19E FY20E

Source: Company, MOSL

FY13

FY18E FY19E FY20E

Source: Company, MOSL

23 August 2017

15

Trident

Exhibit 19: Surging toward becoming debt-free

Net Debt to Equity (x)

3.0

1.9

1.7

Exhibit 20: Cash flow from operations to remain strong

CFO (INRm)

10,451

9,428

10,432

1.4

1.0

0.7

0.5

0.2

3,803

7,469

5,441

5,288

8,427

FY13

FY14

FY15

FY16

FY17

FY18E FY19E FY20E

Source: Company, MOSL

FY13

FY14

FY15

FY16

FY17

FY18E FY19E FY20E

Source: Company, MOSL

TRID’s overall utilization rate is expected to improve further on better operational

efficiencies, led by a significant improvement in utilization of bed linen, followed by

bath linen. This, coupled with top-line growth, should lead to improved return

ratios.

We estimate 9% sales CAGR and 24% PAT CAGR over FY17-20, with improving RoCE

and RoE (from 7.5% and 13% in FY17 to 13% and 17.1% in FY20, respectively). IND

AS adjustment recognized on fair valuation of PPE to the tune of INR7,582m has

resulted in a depressed return ratios, with RoE and RoCE standing at 18.3% and 8.6%

in FY17 pre-adjustment v/s 13% and 7.5% in FY17 post-adjustment. Consequently,

pre-adjusted RoE and RoCE is expected to increase to 21.4% and 15.1% in FY20E

respectively.

Exhibit 21: Improved utilization in bed linen

Installed capacity (mn mtrs)

50%

40%

29%

Utilization (%)

60%

74%

Exhibit 22: Improved utilization in bath linen

Installed capacity (MT)

67%

38%

41%

50%

54%

Utilization (%)

60%

65%

43

FY17

43

FY18E

43

FY19E

43

FY20E

42

FY13

42

FY14

90

FY15

90

FY16

90

FY17

90

90

90

FY18E FY19E FY20E

Source: Company, MOSL

Source: Company, MOSL

Exhibit 23: Higher utilization to improve return ratios

23.7

RoE

RoCE

16.1

9.0

10.9

17.1

13.0

12.3

7.3 6.5

9.9

12.4

7.7

7.2

13.0

7.5

14.5

FY13

FY14

FY15

FY16

FY17

FY18E

FY19E

FY20E

Source: Company, MOSL

23 August 2017

16

Trident

Valuation and view

Initiating with Buy rating









We believe TRID is set to benefit from multiple factors, including industry growth and

the expanding share of bed linen from 4% of overall revenues in FY17 to 9% in FY20E.

The rising share of copier paper (from 45% of Paper sales volume in FY13 to 60% in

FY17) is expected to lead to Paper business margin expansion of 340bp to 38% in FY20.

We estimate a CAGR of 9% in sales and 24% in PAT over FY17-20, with improving RoCE

and RoE (from 7.5% and 13% in FY17 to 13% and 17.1% in FY20, respectively).

We value TRID at 11x FY19E EPS, arriving at a price target of INR114, implying 39%

upside. We initiate coverage on TRID with a Buy rating.

Growth in bed linen segment

The company is expected to turn EBITDA profitable in the recently ventured bed

linen segment by 3QFY18 as utilization touches 40%. In the first year of operations,

bed linen witnessed utilization of 29%, which is expected to increase to 60% in FY20.

Also, the segment’s share in overall revenue is expected to increase from 4% in FY17

to 9% in FY20.

Exhibit 24: Bed linen to post revenue CAGR of 44% over

FY17-20E

Revenues (INRm)

69%

50%

38%

40%

30%

29%

Gr. (%)

Exhibit 25: Bed linen utilization set to improve to 60% in

FY20E

Installed capacity (mn mtrs)

Utilization (%)

60%

1,800

FY17

3,035

FY18E

4,172

FY19E

5,408

FY20E

43

FY17

43

FY18E

43

FY19E

43

FY20E

Source: Company, MOSL

Source: Company, MOSL

Higher utilization in bath linen segment

TRID used to run at high utilization of 74% in the towel segment in FY13. However,

utilization declined thereafter as the company almost doubled its capacity in the

segment from 42MT in FY13 to 90MT in FY15 to make itself future-ready. Going

forward, the company is expected to witness higher utilization (65% in FY20E v/s

50% in FY17), which would not require further addition of spindles as yarn capacity

would be utilized in-house.

TRID’s rising share in global market

The share of Indian companies in the global textile market is on the rise as the

country is becoming highly competitive in terms of raw material cost, labor cost and

level of automation, leading to improved quality. TRID has been proactive in

capitalizing on this opportunity, leading to an increase in the company’s share in

global towel exports to the US (from 10% in CY14 to 13% in CY16). Also, the

company’s share in Indian towel exports to the US has also increased from 28% in

CY14 to 32% in CY16.

23 August 2017

17

Trident

Paper biz margin driven by branded copier paper

TRID has consistently increased its share of copier paper over the years. Copier

paper contributed 45% of its overall Paper sales volume in FY13, which increased to

60% in FY17. Since, copier paper commands high margins, we expect Paper business

margin to expand 340bp to 38% in FY20.

Value TRID at 11x P/E multiple on FY19E EPS

We believe TRID is set to benefit from multiple factors, including industry growth

and expanding share of bed linen/copier paper. Hence, we estimate 9% sales CAGR

and 24% PAT CAGR over FY17-20, with improving RoCE and RoE (from 7.5% and 13%

in FY17 to 13% and 17.1% in FY20, respectively). IND AS adjustment recognized on

fair valuation of PPE to the tune of INR7,582m has resulted in a depressed return

ratios, with RoE and RoCE standing at 18.3% and 8.6% in FY17 pre-adjustment v/s

13% and 7.5% in FY17 post-adjustment. Consequently, pre-adjusted RoE and RoCE is

expected to increase to 21.4% and 15.1% in FY20E respectively. We value TRID at

11x FY19E EPS, arriving at a TP of INR114, implying 39% upside. We initiate coverage

with

Buy.

Exhibit 26: TRID’s 1-year forward P/E

P/E (x)

33

25

17

9

1

2.0

8.6

3.6

13.5

Avg (x)

Max (x)

Min (x)

+1SD

29.6

-1SD

-tv Perf.

9.4

Source: Company, MOSL

Exhibit 27: Peer Comparison

Company Name

Vardhman Textiles Ltd.

Indo Count Industries Ltd.

Welspun India Ltd.

KPR Mill Ltd.

Trident Ltd.

PE

Market Cap.

(USD m)

FY18E FY19E

1,047

9.1

7.5

318

9.0

7.7

1,154

11.5

9.5

892

15.6

13.3

625

9.9

7.9

PB

FY18E

1.4

2.0

2.6

3.5

1.4

FY19E

1.2

1.6

2.2

2.9

1.2

RoE %

FY18E FY19E

15.2

16.4

22.9

21.8

25.3

24.9

23.4

22.2

14.5

16.1

EV/Sales

Sales CAGR PAT CAGR

FY18E FY19E FY17-19E FY17-19E

1.2

1.1

7%

5%

1.0

0.9

6%

4%

1.5

1.3

11%

11%

2.0

1.8

16%

21%

1.2

1.0

10%

25%

Source: Company, MOSL

23 August 2017

18

Trident

Bull & Bear case

Bull case



In the bull case, we are assuming a boost in demand from the global home









textile industry, resulting in a significant improvement in utilization, and thus,

driving volume growth. Over FY17-20, we assume revenue CAGR of 13% (9% in

base case), EBITDA CAGR of 16% (11% in base case) and PAT CAGR of 32% (24%

in base case).

We assume that the company will be able to convert small orders in bed linen

into sustainable large orders, resulting in revenue CAGR of 59% over FY17-20 in

the bed linen segment (44% in base case).

We assume that the company would leverage its market leadership position in

bath linen and expand into overseas markets other than the US, resulting in

revenue CAGR of 18% over FY17-20 in the bath linen segment (12% in base

case). We assume a rapid shift in product mix toward high-value products,

resulting in significant margin expansion.

Accordingly, we are assuming 140bp EBITDA margin expansion (110bp in base

case) to 20.1% over FY17-20. This will lead to EPS CAGR of 32% over FY17-20.

Assuming a target multiple of 12x in the bull case instead of 11x that we have

taken for the base case, we get a bull case target price of INR154 (upside of 88%

to CMP) instead of the base case target price of INR114 (upside of 39%), based

on FY19E EPS.

Bear case



In the bear case, we are assuming muted growth in global home textile industry,









leading to pressure on capacity utilization in both bed and bath linen. Over

FY17-20, we assume revenue CAGR of 1% (9% in base case), EBITDA CAGR of 2%

(11% in base case) and PAT CAGR of 7% (24% in base case).

We assume that the company will face increased pressure from competitors and

at raw material prices front, which would not allow the company to sustain large

orders in bed linen. We assume revenue CAGR of 15% over FY17-20 in the bed

linen segment (44% in base case).

We assume that increased competition, coupled with muted growth in the

global home textile industry, would restrict growth in the bath linen segment.

We assume utilization in the segment would dip down to 45% in FY20 (65% in

base case).

Accordingly, we are assuming 50bp EBITDA margin expansion (110bp in base

case) to 19.2% over FY17-20. This will lead to EPS CAGR of 7% over FY17-20.

Assuming a target multiple of 10x, we get a bear case target price of INR72

(downside of 12%), instead of the base case target price of INR114 (upside of

39%), based on FY19E EPS.

23 August 2017

19

Trident

Exhibit 28: Scenario Analysis – Bull Case

Sales (INR m)

Sales growth (%)

EBITDA (INR m)

EBITDA Margin (%)

EBITDA growth (%)

PAT (INR m)

PAT Margin (%)

PAT growth (%)

EPS (INR)

Target multiple (x)

Target price (INR)

Upside/downside (%)

FY17

47,438

27.8

8,882

18.7

22%

3,372

7.1

39.3

6.6

FY18E

59,135

24.7

11,413

19.3

28%

5,471

9.3

62.2

10.7

FY19E

63,889

8.0

12,586

19.7

10%

6,546

10.2

19.7

12.8

12

154

88

Exhibit 29: Scenario Analysis – Bear Case

Sales (INR m)

Sales growth (%)

EBITDA (INR m)

EBITDA Margin (%)

EBITDA growth (%)

PAT (INR m)

PAT Margin (%)

PAT growth (%)

EPS (INR)

Target multiple (x)

Target price (INR)

Upside/downside (%)

FY17

FY18E

FY19E

47,438 49,206 48,157

27.8

3.7

-2.1

8,882

9,201

9,102

18.7

18.7

18.9

22%

4%

-1%

3,372

3,634

3,652

7.1

7.4

7.6

39.3

7.8

0.5

6.6

7.1

7.2

10

72

-12

Source: Company, MOSL

Source: Company, MOSL

23 August 2017

20

Trident

Industry overview

Home Textile presents huge opportunity with rising Indian share in global market

Global home textile industry

The global home textile industry is expected to grow at a 3.5% CAGR over 2015-20

to reach USD131.5b, driven by growth in bed linen/spread and bath linen.

The bed linen and bed spread segment accounted for the largest share of 43.9% in

2014, and is expected to grow at a CAGR of 4.4%, from USD48.9b in 2015 to

USD60.8b by 2020. Bath/toilet linen accounted for the second largest market share

– it is expected to grow at 3.5% to reach USD26.4b by 2020, representing 20.1%

market share.

Exhibit 30: Size of global home textile market – 2020E (USDb)

Upholstery, 15.4

Kitchen linen, 11.2

Floor, 17.6

Bed linen & Bed

spread, 60.8

Bath/Toilet linen,

26.4

Source: Company, MOSL

Exhibit 31: Global bed & bath linen market size (USDb)

Bed linen & Bed spread

47.1

26.4

Bath/Toilet linen

60.8

21.6

2014

2020E

Source: Company, MOSL

India commands the third largest share in the Asia-Pacific home textile market.

Home textile spending in India (at USD3.7b in 2014E) is expected to grow at a CAGR

of 7.2% over 2015-20 (fastest in the world) to reach USD5.6b by 2020.

Indian home textile market

Bed linen and bed spread segment accounted for 58.1% of the Indian home textile

market worth USD2.1b in 2014, and is expected to witness highest growth over

2015-20 (CAGR of 7.4%) to reach USD3.3b. Bath/Toilet linen, which held the second

largest market share in 2014, is expected to register a CAGR of 6.9% to reach

USD0.9b by 2020.

23 August 2017

21

Trident

Growth in the domestic textile segment is expected to be driven by India’s

advantageous position in terms of raw material and labor cost. India has a strategic

advantage over its major competitor China in terms of labor cost (USD1.12 per hour

v/s USD2.65 per hour in China), according to the Werner International 2014 report.

Moreover, the Indian government’s policies – e.g. Technology Upgradation Fund

Scheme (TUFS), duty drawback, liberalization of FDI policy and EPCG – have

provided a big boost to the textile industry.

Exhibit 32: Size of Indian home textile market - 2020E (USDb)

Upholstery,

0.9

Floor, 0.3

Kitchen

linen, 0.2

Bed linen &

Bed spread,

3.3

2014

Source: Company, MOSL

2.1

0.9

Exhibit 33: Indian bed & bath linen market size (USDb)

Bed linen & Bed spread

Bath/Toilet linen

3.3

Bath/Toilet

linen, 0.9

0.6

2020E

Source: Company, MOSL

Exhibit 34: Market share in US towel market

India

China

35%

23%

25%

25%

16%

Pakistan

ROW

36%

26%

15%

23%

2013

22%

2015

38%

25%

15%

22%

2017

Source: Company, MOSL

40%

30%

23%

15%

22%

2009

24%

2011

Exhibit 35: Market share in US sheet market

India

China

Pakistan

38%

26%

29%

19%

23%

16%

23%

2011

18%

2013

24%

12%

17%

2015

23%

12%

16%

2017

Source: Company, MOSL

22%

14%

ROW

46%

48%

49%

26%

2009

23 August 2017

22

Trident

Domestic paper industry to witness CAGR of 8-10%

The Indian paper industry accounts for ~3% of the world’s paper production, with a

turnover of ~INR500b. Total production grew at a CAGR of 13.3% over FY11-15 to

~16.63m tonnes. The domestic paper industry, employing more than 0.5m people

directly and 1.5m people indirectly, is being driven by multiple factors:



The government policies such as 100% FDI in the sector and 0% import duty on

machinery support growth in the industry. Further, the GoI has earmarked

spending of INR280b on education and proposed to open 62 Navodaya

Vidyalaya over the next two years.



The country is witnessing a constant increase in the literacy rate (from 65% in

2001 to 74% in 2011).



Demand for paper is directly linked to growth in the publications sector. The

country witnessed an increase in the number of registered publications

(newspapers and other periodicals) from 73,146 in 2009 to 1,05,443 in 2015.



Additionally, the industry is witnessing increased demand for packaging

products and heightened corporate activity.

The paper consumption in India is expected to grow by an average annual growth

rate of 8-10% over FY16-19, with capacity addition in line with demand growth.

Annual per capita consumption of paper in India remains at a mere 13kg v/s global

average of 57kg, providing enough headroom for growth.

Demand in the paper industry is expected to be driven by growth in branded copier

paper (CAGR of 10% over FY17-FY21), which is expected to outpace growth in

writing and printing paper (CAGR of 4.7%).

Exhibit 36: Annual per capita consumption of paper (kg)

US Japan EU

224

218

China

Indonesia

World Avg.

India

Exhibit 37: India’s demand supply matrix of paper industry

Production (MT)

10.8

10.8

10.1

Demand (MT)

11.2

10.7

159

75

29

Per capital consumption (kg)

57

9.8

13

FY14

FY15

FY16

Exhibit 38: Paper consumption pattern by category

Exhibit 39: Copier paper to grow at 10% CAGR over FY17-21

Writing & Printing paper (MT)

Branded Copier (MT)

5.2

Newsprint,

18%

Speciality,

4%

4.3

Paperboard

& Packing,

46%

Printing &

Writing,

32%

0.9

1.3

FY17

Source: Company, MOSL

FY21E

Source: Company, MOSL

23 August 2017

23

Trident

Key risks

Currency appreciation

TRID has presence across the globe, with exports forming 89% of revenue in the bed

and bath linen segment, 32% in yarn and 9% in paper. The Indian currency

appreciated 2.7% against the USD from Apr’16 to Jun’17. Since a large part of the

company’s revenue is exposed to currency risk, any unfavorable movement in

currency would have a negative impact of profitability.

Fluctuating cotton prices

The industry witnessed a sharp increase of 20% in cotton prices from Apr’16 to

Jun’17. Since cotton is the major raw material for the company, any unfavorable

fluctuation in the cotton prices directly impacts the margins.

23 August 2017

24

Trident

Management overview

Mr Rajinder Gupta, Co-Chairman

Mr. Gupta is the founder of the company and served as Managing Director from

1992 to 2012. A first generation entrepreneur having rich & varied exposure of

promoting industrial ventures over the last three decades, Mr. Gupta was awarded

“Padmashree” in 2007, in recognition of his distinguished services in the field of

trade and industry. He is the Nominated Vice-Chairman of Punjab State Planning

Board, Chairman of FICCI Regional Advisory Council (Punjab, Haryana, Chandigarh &

HP) and member of Managing Committee of ASSOCHAM.

Mr Abhishek Gupta, Chief Executive Officer

Mr. Gupta, serving as the CEO of the company, leads the Corporate Marketing and

Innovation Team and spearheaded the branding initiatives of Copier Paper. He holds

Bachelor’s Degree in Law & Business studies from University of Warwick,

International Marketing from Harvard Business School and Entrepreneurial

Development Program from ISB, Hyderabad. He was recently honored with the

ASSOCHAM Leadership Award (CEO), 2016.

Ms Pallavi Shardul Shroff, Chairperson

Ms Shroff is currently Chairperson and independent director on company’s board.

She is a Managing Partner of Shardul Amarchand Mangaldas & Co. having over 35

years of experience. She is the National Practice Head of Dispute Resolution, leading

litigation and arbitration teams and mentors the Competition Law practice at the

firm. She has been recognized as one of the Most Powerful Women in Indian

Business by Business Today.

Mr Rajiv Dewan, Independent Director

Mr. Dewan is currently an independent director on company’s board. He is a

practicing Chartered Accountant and possesses wide experience in tax planning,

management consultancy, business restructuring, capital market operations, SEBI-

related matters and other corporate laws.

Mr Deepak Nanda, Managing Director

Mr. Nanda is currently the Managing Director. He is an alumnus of IIM, Ahmedabad

and holds a degree of Master of Science in Computer Software and Management.

Mr Nanda possesses more than three decades of experience in business

development, client relationship, contract negotiations, project implementation and

delivery, and improving the efficiency and effectiveness of business.

23 August 2017

25

Trident

Financials and valuations

Consolidated - Income Statement

Y/E March

Gross Revenue from Operations

Change (%)

Raw Materials

Employees Cost

Other Expenses

Excise

Total Expenditure

% of Sales

EBITDA

Margin (%)

Depreciation

EBIT

Int. and Finance Charges

Other Income

PBT bef. EO Exp.

EO Items

PBT after EO Exp.

Total Tax

Tax Rate (%)

Minority Interest

Reported PAT

Adjusted PAT

Change (%)

Margin (%)

FY14

39,096

15.9

20,521

2,870

8,429

31,820

81.4

7,276

18.6

2,684

4,592

2,103

163

2,652

0

2,652

681

25.7

30

1,940

1,940

293.5

5.0

FY15

38,018

-2.8

19,309

3,872

8,230

31,410

82.6

6,608

17.4

3,213

3,395

2,060

345

1,680

0

1,680

501

29.8

0

1,179

1,179

-39.3

3.1

FY16

37,112

-2.4

17,286

4,295

7,778

455

29,815

80.3

7,297

19.7

3,366

3,931

1,452

334

2,813

0

2,813

392

13.9

0

2,421

2,421

105.4

6.5

FY17

47,438

27.8

22,916

5,794

9,351

494

38,556

81.3

8,882

18.7

4,125

4,757

1,410

1,035

4,382

0

4,382

1,016

23.2

-7

3,372

3,372

39.3

7.1

FY18E

52,164

10.0

25,091

6,468

10,172

522

42,253

81.0

9,911

19.0

4,187

5,725

1,169

939

5,495

0

5,495

1,274

23.2

0

4,221

4,221

25.2

8.1

FY19E

57,122

9.5

27,419

6,969

11,082

571

46,040

80.6

11,082

19.4

4,258

6,824

956

1,028

6,896

0

6,896

1,599

23.2

0

5,297

5,297

25.5

9.3

(INR Million)

FY20E

61,677

8.0

29,543

7,401

11,904

617

49,465

80.2

12,212

19.8

4,319

7,893

669

1,110

8,334

0

8,334

1,933

23.2

0

6,401

6,401

20.9

10.4

Consolidated - Balance Sheet

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Minority Interest

Total Loans

Deferred Tax Liabilities

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Capital WIP

Total Investments

Curr. Assets, Loans&Adv.

Inventory

Account Receivables

Cash and Bank Balance

Loans and Advances

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Appl. of Funds

E: MOSL Estimates

FY14

3,111

5,737

9,278

0

18,623

1,082

28,983

34,858

16,902

17,956

363

1,152

12,344

6,429

2,641

250

3,024

2,832

2,326

267

239

9,513

28,983

FY15

5,086

9,467

14,554

0

25,801

1,242

41,597

48,688

20,049

28,639

2,219

309

13,904

7,508

2,033

170

4,192

3,473

2,490

534

450

10,431

41,597

FY16

5,094

19,267

24,361

0

36,592

1,582

62,535

70,389

23,415

46,974

571

723

17,025

9,065

2,513

819

4,627

2,758

2,237

373

148

14,266

62,535

FY17

5,096

22,473

27,568

0

29,733

1,655

58,956

71,122

27,540

43,582

1,098

1,054

16,132

7,747

3,751

1,326

3,307

2,909

2,302

390

217

13,223

58,956

FY18E

5,096

25,741

30,837

0

25,233

1,655

57,725

72,500

31,727

40,774

720

1,054

18,392

8,335

4,287

2,133

3,637

3,214

2,547

429

238

15,178

57,725

FY19E

5,096

29,843

34,938

0

19,733

1,655

56,326

73,576

35,985

37,591

644

1,054

20,543

8,956

4,695

2,910

3,982

3,505

2,775

469

261

17,038

56,327

(INR Million)

FY20E

5,096

34,800

39,896

0

11,733

1,655

53,283

74,591

40,304

34,287

629

1,054

21,084

9,486

5,069

2,228

4,300

3,770

2,981

507

282

17,314

53,284

23 August 2017

26

Trident

Financials and valuations

Ratios

Y/E March

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

FCF per share

Return Ratios (%)

RoE

RoCE

RoIC

Working Capital Ratios

Fixed Asset Turnover (x)

Asset Turnover (x)

Inventory (Days)

Debtor (Days)

Creditor (Days)

Leverage Ratio (x)

Current Ratio

Interest Cover Ratio

Net Debt/Equity

FY14

3.8

9.1

18.2

0.3

8.1

FY15

2.3

8.6

28.6

0.6

28.9

35.4

9.5

2.9

1.8

10.2

0.7

7.2

9.9

7.7

7.2

0.8

0.9

72

20

24

4.0

1.6

1.7

FY16

4.8

11.4

47.8

0.9

22.6

17.2

7.2

1.7

2.1

10.6

1.1

-11.6

12.4

7.2

6.8

0.5

0.6

89

25

22

6.2

2.7

1.4

FY17

6.6

14.7

54.1

1.2

22.6

12.4

5.6

1.5

1.5

7.9

1.5

18.0

13.0

7.5

6.3

0.7

0.8

60

29

18

5.5

3.4

1.0

FY18E

8.3

16.5

60.5

1.6

22.6

9.9

5.0

1.4

1.2

6.5

1.9

14.6

14.5

9.0

8.0

0.7

0.9

58

30

18

5.7

4.9

0.7

FY19E

10.4

18.7

68.6

1.9

22.6

7.9

4.4

1.2

1.0

5.3

2.4

16.5

16.1

10.9

9.9

0.8

1.0

57

30

18

5.9

7.1

0.5

FY20E

12.6

21.0

78.3

2.4

22.6

6.5

3.9

1.0

0.8

4.2

2.9

18.5

17.1

13.0

12.0

0.8

1.2

56

30

18

5.6

11.8

0.2

0.3

12.0

23.7

12.3

12.1

1.1

1.3

60

25

22

4.4

2.2

1.9

Consolidated - Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

CF from Operations

Others

CF from Operating incl EO

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Issue of Shares

Inc/(Dec) in Debt

Interest Paid

Dividend Paid

Others

CF from Fin. Activity

Inc/Dec of Cash

Opening Balance

Closing Balance

FY14

2,652

2,684

2,028

-584

435

7,214

255

7,469

-1,345

6,123

-411

-58

-1,814

433

-4,062

-2,106

-5

0

-5,740

-86

336

250

FY15

1,680

3,213

1,939

-347

-977

5,509

-68

5,441

-1,789

3,652

192

396

-1,200

187

-1,966

-2,056

-486

0

-4,321

-80

250

170

FY16

2,766

3,376

1,230

-600

-1,424

5,348

-60

5,288

-11,214

-5,926

-250

132

-11,332

611

7,809

-1,367

-360

0

6,694

649

170

819

FY17

4,382

4,125

1,410

-1,016

1,550

10,451

0

10,451

-1,259

9,192

-331

668

-922

2

-6,859

-1,410

-761

7

-9,022

507

819

1,327

FY18E

5,495

4,187

1,169

-1,274

-1,149

8,427

0

8,427

-1,000

7,427

0

0

-1,000

0

-4,500

-1,169

-952

0

-6,621

806

1,327

2,133

(INR Million)

FY19E

6,896

4,258

956

-1,599

-1,082

9,428

0

9,428

-1,000

8,428

0

0

-1,000

0

-5,500

-956

-1,195

0

-7,651

777

2,133

2,910

FY20E

8,334

4,319

669

-1,933

-958

10,432

0

10,432

-1,000

9,432

0

0

-1,000

0

-8,000

-669

-1,444

0

-10,113

-682

2,910

2,228

23 August 2017

27

Trident

NOTES

23 August 2017

28

REPORT GALLERY

RECENT INITIATING COVERAGE REPORTS

Rs

Disclosures:

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Trident

Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock

broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed

public company, the details in respect of which are available on

www.motilaloswal.com.

MOSL is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock

Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Metropolitan Stock Exchange Of India Ltd. (MSE) for its stock broking activities & is Depository participant with Central Depository Services Limited

(CDSL) & National Securities Depository Limited (NSDL) and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products. Details of associate entities of Motilal Oswal Securities Limited are

available on the website at

http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf

Pending Regulatory Enquiries against Motilal Oswal Securities Limited by SEBI:

SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold

inquiry and adjudge violation of SEBI Regulations; MOSL requested SEBI to provide all documents, records, investigation report relied upon by SEBI which were referred in Show Cause Notice and also sought personal

hearing. The matter is currently pending.

MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have beneficial ownership of 1% or more securities in

the subject company at the end of the month immediately preceding the date of publication of the Research Report.

MOSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a)

from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and

earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other

potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s),

as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the

research report.

Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have received any compensation from the subject company in

the past 12 months.

In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:

a)

managed or co-managed public offering of securities from subject company of this research report,

b)

received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,

c)

received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.

d)

Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report.

MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure

of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL and / or its affiliates do and seek to do business including investment banking with

companies covered in its research reports. As a result, the recipients of this report should be aware that MOSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research

Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

Terms & Conditions:

This report has been prepared by MOSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way, transmitted to,

copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOSL. The report is based on the facts, figures and information that are considered

true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not

been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice.

The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though

disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOSL will not treat recipients as customers by virtue of their receiving this report.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or

indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

Disclosure of Interest Statement



Analyst ownership of the stock

Trident

No

A graph of daily closing prices of securities is available at

www.nseindia.com, www.bseindia.com.

Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary

trading desk of MOSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an independent view with regards to

subject company for which Research Team have expressed their views.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law,

regulation or which would subject MOSL & its group companies to registration or licensing requirements within such jurisdictions.

For Hong Kong:

This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC)

pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with

Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any

investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities,

products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research

Analysis in Hong Kong.

For U.S.

Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is

not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States.

Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S.

persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional

investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional

investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and

interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S.

registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and

therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

For Singapore

Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a

subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in

the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following

representatives of Motilal Oswal Capital Markets Singapore Pte Limited:

Disclaimer:

The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person

or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of

offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or

appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment

objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations

as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to

determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative

products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of

the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the

views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time

without any prior approval. MOSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities

mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities

functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already

available in publicly accessible media or developed through analysis of MOSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is

being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not

directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would

be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to

certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or

representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.

The

person accessing this information specifically agrees to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or

employees responsible for any such misuse and further agrees to hold MOSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this

information due to any errors and delays.

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring

Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id:

na@motilaloswal.com,

Contact No.:022-30801085.

Registration details of group entities.: MOSL: NSE (Cash): INB231041238; NSE (F&O): INF231041238; NSE (CD): INE231041238; BSE (Cash): INB011041257; BSE(F&O): INF011041257; BSE(CD); MSE(Cash): INB261041231;

MSE(F&O): INF261041231; MSE(CD): INE261041231; CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100. Motilal Oswal Asset

Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth

management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities

Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products

23 August 2017

30