Motilal Oswal: Trident Near-Term Demand Outlook Improving; Cost Saving Measures Save Q1
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Motilal Oswal Report
Trident Ltd’s quarterly performance was impacted due to lockdown, leading to capacity utilization of 29–56% for the yarn, towel, bed linen, and paper and chemicals segments in Q1 FY21. Moreover, over the long term, Trident is undertaking initiatives for the US market to sustain and increase volume growth across the Bath Linen and Bed Linen segments and is also targeting key retailers among the top 10 US retailers.
However, Ebitda performance was aided by cost rationalisation measures. Additionally, the company is seeing improving demand for its bed linen segment; on the other hand, demand for paper is expected to be muted in the near term as major offices and schools remain closed. Factoring the beat to our earnings estimates, we increase our profit after tax estimate for FY21 by 21%.
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