Bernstein's Jignanshu Gor Bets On Trent, DMart; Predicts Up To 35% Revenue Growth In FY26

Leading retail chains Trent and Avenue Supermart are the top picks among the sectoral stocks for Jignanshu Gor, group analyst at Bernstein Soc Gen. He expects between 20% and 35% revenue growth in FY26 for the two retail players.

A major change that Trent has seen over the last four years is the complete reversal of the contribution made by Zudio and Westside to its revenues, Gor told NDTV Profit on Wednesday.

He expects a robust 35% revenue growth for the Tata Group’s retail arm, Trent, in FY26, building on FY25’s nearly 40% growth.

“One change that has happened in Trent over the last four years is the complete reversal in the contribution of Zudio and Westside to its fortunes. When the company say their fourth quarter LFL (like-for-like) growth was mid-single digits, they are averaging out what Zudio and Westside are doing. For FY26, we estimate a 35% revenue growth for Trent on the back of the close to 40% which they did for FY25,” he said during a conversation with NDTV Profit.

Trent’s consolidated net profit declined 56.24% year-on-year to Rs 311.60 crore in Q4 FY25 from Rs 712.09 crore in Q4 FY24. Its total income rose 27.2% year-on-year to Rs 4,291.28 crore in Q4 FY25 from Rs 3,374.57 crore in Q4 FY24. Its EBITDA margin for the quarter stood at 16%, while the EBITDA rose 38% YoY to Rs 656 crore from Rs 477 crore in Q4 FY25.

Trent remains a top pick alongside Avenue Supermarts-owned DMart in the retail sector, as per Bernstein’s coverage.  

Gor argued that the market has overestimated the threat of quick commerce to DMart’s core business. He emphasised that both quick-commerce players and DMart can coexist by displacing unorganised retail.

For DMart, Gor sees 20% revenue growth as the critical threshold for investor confidence, with FY25’s 17% growth potentially rising to 20% in FY26 if store additions accelerate or consumer demand improves.

Zudio now contributes over 60% of Trent’s revenue and is valued as a Rs 10,000 crore brand. While Zudio continues to post double-digit LFL growth, Westside, with its premium product focus, is facing challenges due to weaker demand for high-end apparel. Gor explained that the current trend has also been observed in the case of competitors like Shoppers Stop. “The broader struggle is on the Westside,” he added.

“There are two reasons for this. One is the fact that Westside has a greater concentration of its product portfolio on the premium range, which has been struggling. Second is Zudio has done a lot of densification of its store networks. They're adding stores in the same cities, same PIN codes. This gets it a better share of the micromarket but, in the short term, hampers same-store sales growth (SSSG) or LFL,” he said.

Comparing Trent to value retailers like Vishal Mega Mart, V2, and V-Mart, Gor pointed out a dichotomy in consumption patterns. Retailers with a stronger presence in tier-two and tier-three cities are benefiting from lower real consumer inflation in areas like real estate, medical expenses, and education compared to the top 40 urban centres, where Trent has a significant store concentration.

This divide between the top 40 to 50 cities and the remaining 400 cities explains the outperformance of these value-focused competitors, he said.

The analyst attributed Trent’s dip below 30% growth to back-ended store additions, which failed to impact the quarter’s profit and loss statement significantly. However, he remains optimistic, projecting a 35% revenue growth for FY26.

Gor cautioned that Trent’s current consensus multiple of 70 times FY27 earnings could face a “material derating” if growth falls below 30% next year. He suggested a fair multiple for a high return on capital (ROC): a 25–35% growth company like Trent lies between 65 and 75 times earnings. His current target price of Rs 6,500 to Rs 6,700 reflects Zudio’s priced-in growth potential, with a return to his earlier Rs 8,100 target requiring a new growth lever beyond Zudio.

Gor expressed scepticism about the viability of StarQuik, Trent’s quick-commerce arm, citing inefficiencies in its in-store pickup model compared to competitors like Zomato or Swiggy, which rely on dark stores. He advised investors to focus on Zudio and Westside as Trent’s primary value drivers, downplaying Star Bazaar’s growth potential.

Addressing broader retail trends, Gor noted structural challenges for department store formats like Shoppers Stop, which are grappling with down-trading as consumers gravitate toward value retailers to control spending. This cyclical pressure, combined with increased competition from specialised fashion retailers, is weighing on the department store model.

Trent shares closed 4.76% lower at Rs 5,135 apiece on the NSE on Wednesday, while the DMart shares settled at Rs 4,175 apiece, down 3.13%. In comparison, the benchmark Nifty 50 ended flat at 24,334.2, down 0.01%.