Trent's Ambitious FY26 Growth Target Has Macquarie Skeptical, Nuvama Downgrades To 'Hold'

Trent Ltd.'s Annual General Meeting for 2025 received commentary and outlook from brokerages, like Nuvama and Macquarie. Nuvama has downgraded the retail giant to a 'hold' rating, lowering its target price to Rs 5,884 from Rs 6,627, citing near-term headwinds and a current valuation that appears stretched.

Macquarie, on the other hand, maintained an 'underperform' rating with a target price of Rs 7,200, highlighting concerns about the company's growth trajectory and the challenges in achieving its stated goals.

Nuvama's downgrade reflects concerns about near-term headwinds and valuation, while Macquarie's 'underperform' retention is due to broader growth challenges and the difficulty in achieving its FY26 targets.

Nuvama's report indicates that while Trent's management reaffirmed its target of 25% growth for financial year 2026, the current run rate falls short of this. While there's an expected pickup in Zudio Beauty and Star Business, Nuvama notes that these businesses need to stabilise before scaling up, leading to their downgrade.

Commenting on the company's target, Macquarie expressed concern that full-year performance is more representative than any quarter, especially concerning sales, profitability, and store additions.

Despite this, Nuvama acknowledged a positive affirmation of growth prospects, noting that Trent's revenue has doubled since financial year 2023, driven by additions of over 250 stores across formats. Management also remained bullish on the prospects for Star Bazaar and expects it to become a bigger category than fashion and lifestyle.

Both brokerages touch upon store additions and expansion plans. Trent's sales guidance suggests a degree of unseasonal heat and an India-Pakistan conflict, which could impact sales, according to Macquarie.

Trent has historically exceeded its guidance, with financial year 2025 seeing additions of 244 stores for Zudio and 40 stores for Westside, it noted.

Nuvama's key takeaways from the AGM include the potential for Star Bazaar to become larger than Westside and Zudio, its focus on branded products, and the company being on track to reach its target.