Shares of Tata Group’s retail arm Trent Ltd were the top losers in early deals today on growth concerns in the near term. The stock slipped 8.62% to Rs 5653 against the previous close of Rs 6186.40 on BSE. Market cap of the firm slipped to Rs 2.04 lakh crore.
The stock slipped after weak commentary in AGM yesterday.
As per management, Q1FY26 growth is seen around 20% in core fashion business, lower than the 5 year CAGR of 35%.
The management reaffirmed its aspiration of 25% plus growth for the coming few years, but the current run rate falls short of it.
Noting the development, brokerage Nuvama cut FY26E/27E revenue by -5%/-6% and EBITDA by -9%/-12%.
“Pickup in Zudio Beauty and the Star business can become the next big growth levers, but we believe these businesses need to stabilise before scaling up. Slowdown in growth forces our hand to downgrade Trent to ‘HOLD’ with a revised target price of Rs 5,884 (earlier INR6,627),” said Nuvama.
On the other hand, management reaffirmed the vision to scale up revenue 10x in a not-too distant future, citing that the revenue has already doubled since the vision was laid down in FY23. The growth will be backed by robust additions of 250 stores across formats as per management guidance, whose tone has historically been conservative.
Nuvama said, “A significant jump in growth profile, or pickup in other levers i.e. Star Bazaar, Zudio Beauty remain the key risks to our view.”
Nuvama listed down key takeaways from the AGM as below:
i) Trent Hypermarket (Star Bazaar) can become bigger than Westside and Zudio given the size of food industry.
ii) Star Bazaar is focused on the company’s branded products while Big Basket is relatively more expensive; there are no plans to merge these two businesses.
iii) The company is on track to reach 10x target, which was announced during the FY23 AGM; revenue has already doubled since—over the past two years.
iv) Trent plans to add 250-plusstores in all the formats combined for FY26; it may plan to add more stores considering the market conditions and availability of investable properties.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
