'Buy' Trent Shares Maintains Motilal Oswal, Says Aggressive Expansion To Drive Growth

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Motilal Oswal Report

Trent Ltd.'s growth rate has moderated in the last few quarters, though still robust, amid a weak discretionary demand environment.

Back-ended strong store additions in Zudio should drive growth in FY26. However, a recovery in same-store sales growth across fashion and Star formats would be a key near-term monitorable.

We continue to like Trent for its robust footprint additions, strong double-digit growth, long runway for growth in Star (presence in just 10 cities) and potential scale-up of new categories (Beauty, Innerwear, and LGDs).

Our FY26-27 estimates are broadly unchanged. We build in FY25-28E CAGR of ~21%/20%/18% in standalone revenue/Ebitda/PAT, driven by the continuation of robust area additions in Zudio.

We assign 54 times Jun'27E EV/Ebitda to the standalone business (Westside and Zudio; a premium over our Retail Universe, given Trent's superior growth), ~3x Jun’27E EV/sales to Star JV, and 6.5x EV/Ebitda to Zara JV to arrive at our revised target price of Rs 6,650 (vs Rs 6,600 earlier). 

Adjusting the value of Star and Zara, the stock is trading at 77x Jun’27E PE for the standalone business (vs ~90x LT average 1-year forward PE). We reiterate our BUY rating.

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