Shares of Trent Ltd, a Tata Group Company reached a record high of ₹ 1620.10 apiece on the National Stock Exchange (NSE) on Friday, amid a rally in the broader market. At 12:07 Pm, its shares were trading at ₹ 1604.65 apiece.
The stock gained 400% in the past five years to give multibagger returns. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares five years ago, the value of their holdings would have been ₹ 5 lakhs today! In fact, its share price grew at a compounded annual growth rate (CAGR) of 49.55% during this time. In the past year, its share price climbed 49.42%.
Trent Ltd. is engaged in retailing of apparel, footwear, accessories, toys, games, food, grocery & non-food products through its retail formats/ concepts.
The company reported a 64.26% rise in sales to ₹ 2,182 crore in the March quarter of 2023 (Q4FY23), against ₹ 1328.86 crore in the March quarter of 2022 (Q4FY22). Its net profit zoomed to ₹ 54.16 crore in Q4FY23 against ₹ 0.16 crore in Q4FY22.
Meanwhile, brokerage firm Motilal Oswal has maintained a buy rating on the stock with a target price of ₹ 1,835.00. This translates to an upside of 14.36% as compared to the company’s share price of ₹ 1604.65.
It said that Trent reported an all-round improvement in FY23, coming out of the pandemic Impact. There was a healthy recovery in store productivity and a strong 30% store expansion in both Westside and Zudio. Moreover, strong cost-control measures (Exhibit 14) and its cost-efficient FOCO model (franchise-owned company-operated) that help in variabilizing costs, offset the impact of higher raw material prices. The brokerage said that improved traction in Star’s grocery segment with higher productivity and margins could drive the next leg of growth.
Trent is a large-cap stock with a market capitalization of ₹ 56,473 crores. It has an ideal return on equity of 17.93%, but a high debt-to-equity ratio of 1.72. Its shares were trading at a price-to-earnings ratio (P/E) of 126.97, which is substantially higher than the industry P/E of 25.26, indicating that the stock might be overvalued as compared to its peers.
Written By Simran Bafna
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