Trent Ltd, a Tata Group company, which owns Westside and Zudio posted stellar results for the October to December quarter of 2022, after which its share price appreciated to the tune of 7.59 percent to reach an intraday high of ₹ 1329.90 apiece. The company’s shares were trading at ₹ 1315.00 apiece at 11:44 AM on Thursday.
Boosting investor sentiments, the company reported a solid 61 percent growth in its revenue from operations to ₹ 2303.38 crores in the quarter that ended on December 31, 2022. It posted a revenue of ₹ 1499.08 crores in the corresponding quarter of 2021. Its profit increased by 36.06 percent year on year (YoY) to ₹ 154.81 crores in the latest quarter, against ₹ 113.78 crores in the corresponding quarter of 2021.
Trent operates a portfolio of retail concepts. Its primary customer proposition includes Westside- a leading fashion chain, Zudio- a one-stop destination for great fashion at great value and Trent Hypermarket which operates in the competitive food, grocery and daily needs segment under the Star banner.
Talking about its higher revenue growth during the quarter, the company said that the Star business with its tight footprint stores and focus on fresh foods & own brands offering continue to witness improved customer traction with growing sales densities.
The management is optimistic that the company has a differentiated & scalable model to pursue, given the increasingly positive economics at the store level.
According to ICICI Securities, Zudio continues to gain market share in the value fashion space with robust growth. It has been the new growth engine for Trent, given its scalable business model and strong acceptance in Tier II/III cities with sharp price point assortment.
ICICI Securities added that, over the years, Trent has consistently outperformed peers given the strong brand patronage (Westside, Zudio, Star, Zara) and proven business model (Westside: 100 percent private label).
Brokerage firm Motilal Oswal has a buy rating on the shares of Trent with a target of ₹ 1500.00, which indicates an upside of 14.06 percent as compared to its share price of ₹ 1315.00.
Trent is a mid-cap company with a market capitalization of ₹ 49,940 crores. The company has a return on equity of 4.53 percent however a high debt-to-equity ratio of 1.90. Its shares are trading at a price-to-earnings ratio of 112, which is significantly higher than the industry average of 25.34, indicating that the stock might be overvalued as compared to its peers. This could also mean that investors are willing to pay a higher price for the company’s future earnings.
Written by Simran Bafna
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