- Shares of Trent Ltd fell nearly 10% after disappointing Q1 revenue growth and store expansion
- Standalone revenue growth of 19% was below expectations and below 20% for five consecutive quarters
- Same-store sales growth momentum weakened, and revenue per square foot remained weak
Shares of Trent Ltd are lagging in trade on Tuesday, after the Tata Group retailer's first-quarter business update disappointed investors, with slowing revenue growth and concerns over store expansion weighing on sentiment.
The stock fell nearly 10% to an intraday low of Rs 3,010 after opening at Rs 3,080, to later trim some losses and trade at Rs 3,052 apiece as of 9:25 am.
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The biggest concern was Trent's 19% year-on-year standalone revenue growth in the June quarter, which came below analyst expectations. Growth has now remained below 20% for five consecutive quarters, raising concerns over whether the company's earlier high-growth trajectory is losing steam.
Analysts have also flagged a still-weak revenue per square foot trend. Same-store sales growth momentum is expected to have moderated from the previous quarter, adding to concerns about near-term performance. mStore expansion was another disappointment. Trent added 20 stores during the quarter, but only one was a Westside outlet, while the remaining 19 were Zudio stores.
Macquarie maintained its ‘Outperform' rating with a target price of Rs 3,600, but said same-store sales growth likely moderated from Q4 levels. Morgan Stanley also retained its ‘Overweight' rating and Rs 3,151 target. It said revenue growth was below its 21% estimate and expects some near-term stock weakness. Bernstein maintained ‘Outperform' with a Rs 3,500 target but expects a negative stock reaction. It said growth of around 20% may be the new normal unless urban consumption improves sustainably.
Citi remained the most cautious, maintaining a ‘Sell' rating with a Rs 2,733 target. It flagged weak revenue per square foot, rising competition, cannibalisation and expansion into tier-2 and tier-3 cities as key concerns.
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