Trent, the Tata Group’s retail arm, has emerged as the biggest laggard in the Nifty 50 this year. The stock has fallen 33% year-to-date and is down 43% since its inclusion in the benchmark index. Technicals too reflect weakness, with the RSI slipping below 30, indicating oversold conditions. Here's a step-by-step analysis of the stock's fundamentals and technicals:
WHAT'S NOT WORKING?
Growth Pains Emerging
After clocking a blistering growth rate of around 50% in the past, Trent’s topline momentum has cooled to 20% in the last four quarters. Analysts attribute the slowdown to three key factors:
Densification leading to cannibalization
A broader consumer slowdown
A high base effect
Despite these challenges, Trent continues to rank among the fastest-growing consumer companies in India.
Valuations Still Stretched
Valuation concerns persist. The stock currently trades at a PE of 83x, compared to 101x at the start of 2025. While that is below its 5-year average of 131x, it remains elevated. On a 1-year forward basis, the stock trades at 73x earnings.
FIIs Pare Holdings
Foreign investors have steadily trimmed their positions. FII holding has fallen from 24.4% in March 2023 to 18.4% by June 2025, underscoring the waning global appetite.
WHAT MAKES ANALYSTS BULLISH?
Yet, the Street remains largely optimistic. Of the 26 analysts tracking the stock, 17 have a Buy rating, with an average return potential of 27% from current levels. Macquarie’s target price of Rs. 7,200 is the most bullish on the Street.
The optimism stems from expectations of 20–25% sales CAGR in the medium term, steady margin expansion aided by operating leverage, and brand extensions such as “Burnt Toast”, which targets younger Gen-Z consumers. HSBC, in particular, argues that Trent’s growth outlook justifies its premium valuations.
OPERATIONAL STRENGTH INTACT
On the operational front, Trent continues to deliver:
Revenue per sq ft has remained resilient, averaging above ₹15,000 despite aggressive store expansion.
Operating cash flows post-lease have grown from Rs. 455 crore in FY23 to over Rs. 1,120 crore in FY25.
ROCE has improved sharply, from 9% in 2022 to 31% in 2025.
Zudio, Trent’s mass-market brand, has already become India’s first $1 billion apparel label. But at a 2.5% market share, it remains well below peers like Uniqlo in Japan (14%) and Zara in Spain (14%), leaving ample room for expansion.
Trent’s near-term challenges are evident in slowing growth, steep valuations, and foreign investor exits. Yet, the company’s robust unit economics, strong brand equity, and sustained expansion potential have kept analysts bullish.
For investors, the question remains: will Trent’s premium valuations continue to be justified by its growth runway—or has the stock already run too far ahead of its fundamentals?
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