The shares of Tata group company specializing in retailing of apparel, footwear, accessories, toys, games, food, grocery & non food products through various of its retail formats, is in focus after Global brokerage firm Macquarie initiated a Buy Target on it with a 30 percent Upside Potential.
Price action
With a market capitalization of Rs. 1,93,091.90 crores on Friday, the shares of Trent Limited jumped upto 0.8, making a high of Rs. 5460.00 per share compared to its previous closing price of Rs. 5412.40 per share.
What Happened
Trent Limited, engaged in retailing of apparel, footwear, accessories, toys, games, food, grocery & non food products through various of its retail formats is in focus after Global brokerage firm Macquarie initiated a “Buy” Target of Rs. 7,000 on it with an upto 30 percent Upside Potential.
The reasons for the “Buy” target
- Attractive Valuation: Trent’s stock price has halved from its peak, making it undervalued according to Macquarie’s analysis.
- Rising Discretionary Spending: The company benefits from India’s rising discretionary spending in fashion and an integrated back-end that enables faster product drops.
- Strong Growth Potential: The company is expected to continue expanding its retail operations, especially with its Zudio brand, which has been showing significant growth. These expansion of stores through franchising supports Trent’s impressive return profile, making its growth trend likely to continue.
- Market Positioning: Trent is considered a leader in Asia’s retail sector due to its strong performance in key metrics like growth, return profile, and inventory turnover, benefiting from strong brand recognition and increasing demand.
- Positive Financials: Macquarie anticipates the company’s earnings to improve, supporting its positive outlook and price target.
These factors combined led Macquarie to see the potential for a significant upside in the stock.
About the company
Trent Limited is an Indian retail company primarily involved in the fashion and lifestyle sector. It operates popular retail brands such as Westside, Zudio, and Starboard. The company is part of the Tata Group and has a significant presence in both physical and online retail. Trent focuses on providing high-quality, affordable fashion across various product categories.
Product Category Contribution
The categories based on its products include 35 percent from General Merchandise & Apparel, 26 percent from Staples, 23 percent from FMCG, and the remaining 16 percent from Fresh, as of Q3FY25. The own brand share increased to 74 percent from 69 percent a year ago. Fabsta, Star, Skye, Zudio, Smartle, Zudio, Klid, Shubh Anand, and Misbu are some of the brands owned by Trent.
Financials
The company’s revenue rose by 32.9 percent from Rs 3,546.95 crore to Rs 4,715.64 crore in Q3FY24 -25. Meanwhile, Net profit rose by 32.8 percent from Rs. 374.36 crore to Rs. 497.25 crore during the same period.
Written by Sridhar J
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