Shares of Trent Ltd. rose to an all-time high on Thursday after its profit surged 45% in the first quarter, leading Jefferies to raise its earnings estimates and price target.
However, the brokerage maintained a 'hold' on the stock, citing its expensive valuation.
The company's net profit rose by 45.02% year-on-year to Rs 166.7 crore in the quarter ended June, according to an exchange filing.
Trent Ltd. Q1 FY24 Highlights (Consolidated, Year-on-Year)
Revenue up 45.76% at Rs 2628.4 crore.
Ebitda up 25.98% at Rs 367.4 crore.
Margins at 13.98% versus 16.17%.
Net profit up 45.02% at Rs 166.7 crore.
Here's what Jefferies has to say about Trend's Q1 results:
Jefferies on Trent Ltd.
Consolidated revenue grew ahead of estimates, due to a more than 20% rise in Westside, while Zudio's revenue doubled with a 50% increase in store base.
Consolidated gross margin fell 250 basis points on a year-on-year basis, but rose 470 basis points sequentially, ahead of estimates.
The company reported a sharp rise in Ebitda, with a 26% rise year-on-year, with margin at 14%.
Subsidiaries turned Ebitda positive for the first time in years, despite a continued decline in revenue.
Seven new stores were added for Westside, and 36 new ones for Zudio, with the company's total number of stores reaching 700, across 145 cities.
Raised earnings-per-share estimates for FY24 and FY25 by 2% and 5%, respectively, while maintaining a 'hold' rating on an expensive valuation.
Revised price target to Rs 1,640 (earlier Rs 1,450), implying a potential downside of 4%.
Shares of Trent Ltd. rose 5.96%, before paring gains to trade 5.16% higher at 11:59 a.m., compared to a 0.31% fall in the NSE Nifty 50. The stock price hit an all-time high at Rs 1894.4 per share, intraday.
The average traded volume so far in the day stood at 5.32 times its monthly average. The relative strength index was at 75, indicating the stock may be overbought.
Of the 20 analysts tracking the company, 13 maintain a 'buy' rating, three suggest a 'hold', and four suggest a 'sell', according to Bloomberg data. The average 12-month consensus price target implies a downside of 3.2%.
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