What explains the valuation gap between Welspun & Trident? Both are close in terms of operations except that Trident is backward integrated into Yarn (which is at best 4-5% EBITDA business).

• Welspun’s EBITDA margin 15.5% vs 15.1% for Trident.
• Welspun has a higher B2C share vis-a-vis Trident which is more B2B
• Welspun has higher Bed Linen capacity vis-a-vis Trident and hence greater operating leverage in play
• Similar net debt levels (1540crs for Welspun vs 1450 for Trident). Infact, the debt ratios are better for Welspun due to higher absolute EBITDA (1114 crs for Welspun vs 766crs for Trident)

In terms of valuation

If anything its Trident that had an income tax raid recently. Can’t understand the gap.

What’s the logic?

Thanks for starting this thread, something which I had in my list for a couple of weeks now

You have covered almost all important points. A couple of points which I found interesting are:

1. They do not build the hotels from scratch. They go for dislocated hotels which are not working up to their optimum capacities. Once these hotels are identified, they renovate these hotels, re-brand those and operate those hotels with the likes of Marriott, IHG and Hyatt.

This enables them to do away with the challenges involved in building the asset from scratch. Moreover their cost per rooms are very low as compared to industry.

2. They have shared service centres where they carry out operations such as finance, accounting, engineering and procurement centrally. This allows them to have lowest average staff cost per room.

3. The management has extensive experience in the hotel industry.

A couple of risks that I found are:

1. Institutional/PE holding.
2. Operates in the upper-midscale and midscale segment, which faces higher competion.

Disc: Invested.

KDDL’s own business is not growing. See this quarter’s numbers.

Hi Ravi,

Thanks for commenting.

Jupiter is currently 70 PE and with a market cap of Rs 9700 Cr.

Assuming net profit margin more than 15% would be to much optimistic outlook. Narayan hyudaya has 15%, Max has 20% and apollo has 4% net profit margin. so 15% expectation is itself on higher side.

CAGR coming negative because I am not valuing year 2026 and 2027 at 70 PE droping PE at industry level which is 50. so PE valuation is dropping price by 30%.
In Future, rise in share price will have to be totally on earning basis, not from PE expansion. Hence giving multiple of more than 50 is very risky.

Power sector and Railway sector’s beneficiary.
Tailwinds in Nuclear space should provide a push to Powermech.