The agency has also affirmed the company’s short-term rating at “CARE A1+”.

CARE Ratings stated that the ratings assigned to bank facilities of Trident continue to derive strength from its experienced management, diversified and integrated operations across textile, paper and chemicals, geographically diversified revenue stream, and long and established customer relationship with large global retailers for its home textile business.

Ratings also factor its comfortable capital structure and debt coverage indicators, strong liquidity, and fiscal incentives available for textile sector. Despite increase in its term debt for large size debt funded capex, the overall gearing is expected to remain comfortable in medium term supported by healthy net-worth base.

The rating strengths are, however, tempered by decline in total operating income (TOI) and profitability in FY23 due to slowdown in textile exports followed by high interest rate and inflationary pressure in developed markets, however, TOI and profitability grew in 9MFY24 on y-o-y basis.

The ratings also factor the company’s working capital intensive operations, susceptibility of profitability margins to cotton price volatility and foreign exchange rate movements and its presence in the inherently cyclical, fragmented, and competitive textile and paper industries.

The ratings also take cognisance of stabilisation and saleability risks associated with the company’s large-size debt-funded expansion projects, albeit fiscal incentive associated with the project provides comfort.

Trident is the flagship company of the Punjab-based Trident group. The company is engaged in manufacturing of cotton yarn, towel, bed sheet, paper, and chemical products.

The scrip rose 0.49% to currently trade at Rs 40.99 on the BSE.