Updated on: 2026-02-08 As of: 2026-02-08 Latest price: Rs 38.50 (NSE) as of 2026-02-07 Market cap: Rs 19,500 crore Latest earnings period: FY25 (ended Mar 2025); Q1 FY26 results awaited, latest filing Aug 2025 Key sources: https://www.equitymaster.com/research-it/annual-results-analysis/ABHI/TRIDENT-2024-25-Annual-Report-Analysis/12639; https://nsearchives.nseindia.com/corporate/TRIDENT_25082025203212_STX_Intimation.pdf; https://www.tridentindia.com/financial-reports

Event: Trident filed a stock exchange intimation on August 25, 2025, projecting flat FY26 revenue due to US tariff headwinds (50% effective, with additional 25% post-Aug 27), offset marginally by 3-4% growth in yarn and paper segments; Q1 FY26 revenue reported at Rs 1,707 crore vs Rs 1,743 crore YoY. Date: August 25, 2025 Why the Market Reacted: Investors focused on US tariff risks eroding home textiles margins (70% export exposure) amid already softening demand, raising concerns over FY26 profitability despite FY25 PAT growth. Why This Is Not Just News: While tariffs grab headlines, this analysis tests if diversification into yarn/paper can truly sustain margins without US recovery, uncovers hidden working capital strains, and evaluates if FY25's modest growth justifies current valuations amid cotton volatility.

Trident's margin sustainability hinges on successful export diversification away from tariff-hit US home textiles, but this assumes stable cotton prices and forex, which could unravel if global demand weakens further.

Trident generates revenue across three segments: home textiles (~50%, mainly terry towels and bedsheets exported to US/Europe), yarn (~20%, cotton/spun polyester for domestic/industrial use), and paper & chemicals (~30%, tissue/writing paper with domestic focus). Profits stem primarily from home textiles' scale (664 towel looms, 504 bedsheet looms), leveraging integrated backwardation from cotton ginning to finished goods, but margins are volatile due to 70% export mix and cotton price swings (40-50% of costs). Yarn adds stability via 7,464 rotors and air jets, serving apparel weavers, while paper's 175,000 TPA capacity benefits from lower import dependence post-China shifts. Consolidated FY25 revenue hit Rs 69,871 crore (2.6% YoY), with EBITDA at Rs 8,955 crore (down 3.5%), reflecting US demand softness offset by yarn growth. However, working capital intensity (high receivables from exports, inventory for cotton) ties up Rs 1,700 crore net debt, amplifying forex risks (USD/INR depreciation aids but volatility hurts). Unlike pure-domestic peers, Trident's model depends on US retail restocking cycles; diversification rhetoric assumes yarn/paper ramps to 40% mix by FY27, but capex needs (Rs 3,662 crore depreciation FY25) strain free cash if tariffs persist. SEBI-mandated disclosures highlight tariff/competition risks, underscoring that profits require not just volume but pricing power in commoditized textiles.

Revenue CAGR of 11.6% over FY21-25 masks FY25 slowdown to 2.6%, with EBITDA margins slipping to 12.8% from 13.6% due to pricing pressure despite lower interest. PAT growth via tax efficiency hides operating weakness; if cotton rises 10%, margins could dip sub-11% without offsets. Debt reduction aids but capex sustains leverage risks.

Consensus fixates on tariff noise but overlooks structural fragility: home textiles' 70% US exposure assumes quick diversification, yet yarn/paper growth (3-4% projected FY26) can't offset if towels lose 10-15% volumes. Cotton volatility (up 20% in past cycles) erodes 200-300 bps margins, unhedged, while working capital days stretch to 90+ amid export delays—FY25 other income Rs 755 crore masks investment losses (Rs 2,051 crore). Investors assume capex yields ROCE >15%, but recent filings flag end-market slowdowns; peers like Welspun command premiums via brand/retail tie-ups Trident lacks. Forex tailwind (INR depreciation) props EBITDA but reverses sharply, as seen FY23. Non-consensus: paper segment's domestic pricing power wanes with competition from MP-based mills, potentially capping mix shift. If US tariffs sustain >50% vs Bangladesh/Vietnam, revenue could flatline at Rs 70,000 crore, forcing dividend cuts (current ~1.5% yield). Market prices 12% CAGR on 15x P/E, ignoring 20% downside if EBITDA <12% persists. Thesis fails unless yarn capacity utilization hits 85%+ by FY27.

Multiples embed 10-12% revenue growth and 13% margins, but flat FY26 guidance implies de-rating to 12x P/E (Rs 30/share) unless yarn/paper deliver 15%+ growth. Discount to peers assumes execution risks; expansion to 18x requires tariff relief and cotton stability by FY27.

Base case (50% prob) yields modest 8% upside from Rs 38.50, weighted avg target Rs 39. Bear skews downside (30% prob) from margin compression; bull needs policy tailwinds unlikely without US-India FTA progress.

• Cotton price spike >20% YoY without hedging, eroding 300 bps EBITDA (40% cost base)
• US tariffs persisting >50% vs competitors, with SEBI disclosure-mandated monitoring leading to 10%+ volume loss
• Working capital ballooning >Rs 2,000 crore from export delays, straining net debt/equity >0.5x

Trident trades at discount to Welspun (brand strength) but premium to Vardhman (less export risk); deserves no premium unless paper margins sustain >15%, else rerates toward pure-yarn peers on tariff drag.

• Q2 FY26 EBITDA margins and US revenue % (tariff passthrough evidence)
• Management guidance on yarn utilization >80% and capex ROCE in concalls
• Cotton prices vs MSP and US-India trade policy updates via RBI/SEBI filings

Trident's thesis rests on diversifying beyond tariff-vulnerable US home textiles into stable yarn/paper, but success depends on cotton stability, forex benignity, and execution amid high working capital needs. FY25's flat growth and 12.8% margins signal caution; market multiples assume too much from modest offsets, risking 20% downside if Q2 FY26 disappoints. Uncertainty looms from global demand and competition—watch export mix dropping below 65%, sustained sub-12% EBITDA, or debt creep. Investors should track segment revenues quarterly; thesis holds if paper/yarn hit 10% CAGR, but fails without US relief, tilting toward bear outcomes. Position sizing must reflect 30% bear probability in this cycle.