Trent Q4 Preview: Profit Expected To Slump 54% Due To High Base

Zudio and Westside operator, Trent Ltd., is expected to post a substantial profit decline of 54% due to a high base in the corresponding quarter.

Trent had reported an exceptional gain of Rs 543.35 crore in the same quarter last year, primarily from a significant number of lease agreements for its retail stores, and after reassessing the calculations for recognising right-of-use assets and corresponding lease liabilities.

As a first, the retailer issued a business update on April 5, projecting a 28% revenue growth. The company expects to clock Rs 4,334 crore in revenue during the March quarter, compared to Rs 3,381 crore in the same quarter last fiscal year.

The bottom line is estimated to decline sharply, but revenue is projected to rise by 30% year-on-year to Rs 4,131 crore, according to Bloomberg consensus estimates. Ebitda is seen increasing 28% year-on-year to Rs 609 crore, while Ebitda margin is expected to remain largely stable at 14.7% compared to 15% in the year-ago quarter.

Brokerages largely point to a moderation in growth for Trent, citing a combination of high base effects, a subdued consumer demand environment, and intensifying competition in the value fashion segment.

On the bright side, they remain upbeat about Trent's aggressive store expansion strategy — particularly the rapid addition of Zudio stores — and expect this to drive future revenue momentum even as near-term margins stay under pressure.

Q4 Preview (Standalone, YoY)

Bloomberg Estimates versus 4QFY24

• Revenue is estimated to rise 30% to Rs 4,131 crore from Rs 3,381 crore.

• Ebitda is expected to increase 28% to Rs 609 crore from Rs 477 crore.

• Ebitda margin seen at 14.7% compared to 15%.

• Profit is projected to decline 54% to Rs 303 crore from Rs 645 crore.

Brokerage Views

Jefferies | Target Price: Rs 4,763.15 | Rating: Hold

Jefferies noted that the company's guidance for revenue growth pegged at 28% is the slowest in 16 quarters, due to tough macro conditions. Zudio store additions accelerated, with 130 net new stores opened in the fourth quarter. Margins are expected to contract year-on-year due to negative operating leverage, even as store network expansion continues.

Morgan Stanley | TP: Rs 5,325.15 | Rating: Overweight

Morgan Stanley notes that while apparel trends are lacklustre, store acceleration provides a reason to cheer. It expects Trent's standalone revenue growth to be in line with the third quarter, with fashion business revenue up 35% year-on-year.

UBS | TP: Rs 6,200 | Rating: Buy

UBS remains positive on Trent as an "income stimulus play," citing its resilient value retail model and large untapped market opportunity in tier-2 and tier-3 cities.

It expects Zudio to add 400 more stores by 2027 and projects a revenue/EPS compound annual growth rate of 29%/36% over financial years 2025 to 2027. UBS's estimates for the March quarter are ahead of consensus, factoring in higher Zudio store additions and slightly better margins.

Nuvama | TP: Rs 6,662 | Rating: Buy

The brokerage estimated like-for-like growth at 3%, a slowdown from earlier quarters due to cannibalisation from new store openings, weaker demand, and a high base.

Systematix Institutional Equities | TP: Rs 6,002 | Rating: Hold

Systematix flagged moderating growth amid intensifying competition in value fashion. Most store openings are likely to have occurred late in the quarter, with the full benefit expected to reflect from the first quarter of financial year 2026, it said.