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Motilal Oswal Report
Trent Ltd. reported a strong standalone revenue growth of 53% (5% miss) led by 10% like-for-like and store additions in Q3 FY24. This, along with raw material cost tailwinds, led to a gross margin improvement. Further, controlled costs drove Ebitda/profit after tax growth of 86%/2.1 times YoY (6%/8% beat) for the quarter.
Based on strong revenue productivity, aggressive store additions, margin tailwinds from moderating raw material, and operating leverage, we have modeled 30%/31% revenue/Ebitda compound annual growth rate over FY24-26.
We have also maintained our estimates broadly. The continued momentum within Star and improving store metrics offer further upside potential. We reiterate our 'Buy' rating with a revised target price of Rs 4,200, given Trent's strong growth opportunity going forward.
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