Despite robust growth over the past few years (6.5x revenue growth over FY19-25), management indicated that Trent's share in India's fashion and lifestyle retail industry remains in low-single digits. The company believes there is still a long runway for growth and aims to grow at 25%+ annually over the longer term through a multibrand, cluster-based approach to increase its market share in key micro-markets.
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Motilal Oswal Report
Trent Ltd.'s growth rate has moderated in the last few quarters, though still robust, amid a weak discretionary demand environment.
Back-ended strong store additions in Zudio should aid growth in FY26. However, recovery in same-store sales growth across fashion and Star formats would be a key near-term monitorable.
We continue to like Trent for its robust footprint additions, strong double-digit growth, long runway for growth in Star (presence in just 10 cities) and potential scale-up of new categories (beauty, and lab-grown diamonds).
Our FY26-27 estimates are unchanged. We build in FY25-27E CAGR of ~25-26% in standalone revenue/Ebitda/PAT, driven by the continuation of robust area additions in Zudio.
We assign 55x Mar'27E EV/Ebitda to the standalone business (Westside and Zudio; a premium over our Retail Universe, given Trent's superlative growth), 2.5x FY27E EV/sales to Star joint venture, and ~7x EV/Ebitda to Zara JV to arrive at our unchanged target price of Rs 6,900. Adjusting the value of Star and Zara, the stock is trading at 77x FY27E PE for the standalone business (vs ~90x long-term average 1-year forward PE).
We reiterate our Buy rating.
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