This Tata Group stock engaged in operating retail chains, including department stores, hypermarkets, and specialty stores, offering a wide range of products like apparel, groceries, and electronics. Despite falling 42 percent from its 52-week high, it is still overvalued, trading much higher than industry peers, raising concerns about growth and profitability.
Stock Price Movement:
With a market capitalization of Rs. 1,71,600.91 crore, the shares of Trent Limited were currently trading at Rs. 4830.60 per equity share, down nearly around 0.47 percent from its previous day’s close price of Rs. 4853.30.
The stock is down by 41.85 percent from the 52-week high of Rs. 8,345.85 compared to the previous day’s close. The stock has declined by 31.52 percent this last six months but has gained 22.85 percent over the past year.
Company Overview:
Trent Limited was established in 1952 as a retail operations company and a subsidiary of the Tata Group. It operates various retail chains in India, including Westside, Zudio, Star Bazaar, and Landmark. The company offers a wide range of products, such as apparel, footwear, cosmetics, and groceries, across its department stores, hypermarkets, and specialty stores.
What is the news?
Trent Limited’s stock trades at a P/E of 115, nearly three times the industry average of 41.4, and though lower than its five-year median P/E of 179.1, it remains high. This has led to concerns about overvaluation and profit booking, resulting in a 32.37 percent decline in the stock price this calendar year.
Earlier, analysts were positive about Trent’s expansion plans, expecting store additions to boost growth. However, they have now changed their stance, believing that an increasing number of stores may not be beneficial due to weakening consumer demand, which could put pressure on the company’s profitability in the near future.
The slowdown in urban consumption has impacted sales growth, while high operating expenses continue to strain the company’s margins. If sales continue to decline, Trent may struggle to justify its aggressive expansion, leading to further concerns among investors.
Analysts have started cutting their target prices for Trent due to weak demand and high valuations. One of the well-known brokers, Motilal Oswal, has revised its buy target for Trent down to Rs. 7,350, reflecting concerns over slowing sales, profitability pressures, and overall business growth.
Store additions for Zudio and Westside:
Trent Limited continues its strong expansion, adding 82 new stores while closing six in its fashion segment, bringing the total to 907 stores. It opened 14 new Westside stores, reaching 238 locations. Zudio saw significant growth with 58 net new stores, totaling 635, including one in the UAE. Additionally, six other format stores were opened, increasing the count to 34. The Star stores count remained stable at 74 stores.
Management commentary:
Trent’s management highlighted steady growth despite weak consumer sentiment, with fashion concepts like Westside and Zudio posting high single-digit LFL growth. Emerging categories, including beauty, innerwear, and footwear, now contribute over 20 percent of standalone revenue.
Additionally, online sales continue to grow profitably, making up over 6 percent of Westside’s revenue. Additionally, the company approved selling a 29 percent stake in the Massimo Dutti JV for Rs. 20 crore.
Recent quarter results and ratios:
Trent Limited’s revenue has increased from Rs. 3,467 crore in Q3 FY24 to Rs. 4,657 crore in Q3 FY25, which has grown by 34.32 percent. The net profit has also grown by 33.96 percent from Rs. 371 crore in Q3 FY24 to Rs. 497 crore in Q3 FY25.
Trent Limited’s revenue and net profit have grown at a CAGR of 36.31 percent and 73.11 percent, respectively, over the last five years.
In terms of return ratios, the company’s ROCE and ROE should be 23.8 percent and 27.2 percent, respectively. Trent Limited has an earnings per share (EPS) of Rs. 54.4, and its debt-to-equity ratio is 0.39x.
Written By – Nikhil Naik
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