Trent Plunges Nearly 8% In Trade — Here's Why
Trent has now posted six quarters of sub-50% growth amid aggressive store additions. While Westside’s store additions remain strong, Zudio’s expansion pace is tracking below FY25 expectations.
Shares of Trent Ltd. are in focus in trade today on the back of its in-line Q3 business update. The Tata Group company reported a 17% year-on-year increase in standalone revenue to Rs 5,220 crore for Q3, supported by aggressive store expansion. The company opened 17 Westside stores and 48 Zudio outlets during the quarter.
The stock is down nearly 8%, and is trading around the Rs 4086 level apiece.
Of the 28 analysts who have coverage on the parent company of Westside and Zudio, and are tracked by Bloomberg, 18 analysts have a 'buy' rating, five have a hold call, and five have a 'sell' stance on the stock. The upside potential on the stock is averaging at 17.8%.
Trent has now posted six quarters of sub-50% growth amid aggressive store additions. While Westside’s store additions remain strong, Zudio’s expansion pace is tracking below FY25 expectations. However, average revenue per square foot continues to show weakness, raising concerns over profitability and efficiency.
Brokerage views remain mixed. UBS maintained a Buy rating with a target price of Rs 6,200 but highlighted no respite from Trent’s weaker growth trajectory, as Q3 performance missed expectations. Morgan Stanley reiterated its Overweight stance with a target of Rs 5,456, noting an in-line quarter but projecting a 97 bps YoY decline in standalone EBITDA margin to 17.5%.
Citi, on the other hand, retained its Sell call with a target of Rs 4,350, citing higher store additions driving revenue beat but warning of cannibalization, rising competition, and weak revenue per sq ft trends.
Trent’s growth slowdown is evident, with six consecutive quarters of sub-50% growth. The trajectory is as follows: Q3FY25 at 17%, Q2FY25 at 16%, and Q1FY25 at 19%, following 34% and 27% in prior quarters.
Analysts attribute this to aggressive store expansion, declining revenue per sq ft, and cannibalization in tier-2 and tier-3 towns. While expansion fuels topline growth, sustaining margins and improving store productivity remain key challenges for Trent going forward.
