Trent Q4 Results Review: High Base Hits Bottom Line, Zudio Boom, Margin Beat Keep Brokerages Upbeat

Brokerages remained positive on Trent Ltd. after the Tata Group retailer reported a 47% year-on-year decline in standalone net profit to Rs 350 crore for the January–March quarter.

While the bottom line drop was due to a high base with exceptional gains of Rs 576 crore in the year-ago period, operating performance outpaced expectations.

Revenue rose 29% to Rs 4,106 crore, slightly below Bloomberg estimates, while Ebitda jumped 38% to Rs 656 crore, beating the Rs 609 crore forecast. Margins expanded to 16%, versus 14.7% expected.

Trent’s stock fell over 4% intraday despite the solid beat, likely on concerns around like-for-like growth moderation and mixed signals from the Star Bazaar portfolio. Yet, brokerages remained upbeat, highlighting continued margin resilience, strong cost controls, and aggressive store additions.

Citi said Trent delivered a “solid beat” driven by lower operating expenses. It highlighted that Trent’s industry-leading revenue growth and conscious focus on store density over like-for-like growth were strategic positives. The firm raised its fiscal 2027 Ebitda estimates by 4–6% and rolled forward its valuation to March 2027, revising its target price to Rs 7,600 from Rs 6,850.

Nuvama noted the 100-basis-point Ebit margin expansion came despite a dip in like-for-like growth, citing possible demand softness, store cannibalisation, and competition. While the Star format remains a drag, underlying gross margins in Westside and Zudio stayed stable.

It trimmed its fiscal 2026 and 2027 earnings estimates and revised its target price downward to Rs 6,224. Key risks flagged included real estate constraints, rising electricity costs, and discounting by online players.

Macquarie said Trent beat estimates on the back of mid-single-digit same-store growth and lower operating costs. The brokerage remained confident in Trent’s growth outlook, citing strong traction across formats and cities. It raised its target price by 3%, calling the stock one of its "Asia Marquee buy" ideas. Key positives included the pace of store additions, improved working capital intensity, and volume-led growth in fiscal 2025.

Morgan Stanley described the quarter as having “some hits and some misses” with mid-single-digit fashion like-for-like growth and compression in gross margins, likely due to inventory write-offs.

However, it acknowledged a slight beat on Ebitda margins. Associate losses contributed to a minor profit miss. Despite that, revenue per store improved in fiscal 2025 and overall profitability metrics strengthened.