Trent remains a stellar business. However, the ask from the business is too high (from a valuation stencil). Westside seems to be showing signs of customer fatigue, while Zudio seems to be peaking in terms of unit economics.
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HDFC Securities Institutional Equities
Revenue growth of ~40% YoY and a 110 bps YoY margin expansion YoY (to 12.8%) in FY25—for a portfolio where two-thirds of sales come from value fashion.
Unheard of! We concur: Trent Ltd. is by far the most efficient fashion and lifestyle play in India. Now that this fact is out of our system and in the price, we prefer focusing on assessing whether it is nearing peak operating performance across its portfolio.
We suspect
Westside is showing signs of customer fatigue,
Zudio's efficiency is optimal,
success in Star is not a cinch.
We'll double-click on each in a bit. We build in 23% revenue and PBT CAGR over FY25-27 (8-10% lower than consensus).
We maintain Sell on Trent with an SOTP-based target price of Rs 4,300/share (including 60 times adjusted price/earnings for the standalone operations).
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