Shares of Tata Group's retail arm Trent Ltd have delivered multibagger returns in the long term. Trent shares climbed 363%, 435% and 824% in two years, three years and five years, respectively. However, the multibagger stock is oversold on charts, with its RSI at 26.3. This indicates there are more sellers for Trent shares than buyers. The 23% correction this month indicates the short term selloff in the Tata Group stock. The ongoing correction in the short term has sent moving averages for the stock in the red zone. Trent stock is trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.
Trent stock hit a record high of Rs 8,345.85 on October 14, 2024. It has lost 34.63% since then.
It has seen high volatility in the last one year with a beta of 1.1. The stock was trading on a flat note in the current session. Trent stock was down just 0.02% to Rs 5446 against the previous close of Rs 5447.90 on BSE. Market cap of the firm fell to Rs 1.94 lakh crore.
Axis Securities has a price target of Rs 6050 with a buy call. The duration for this call is six to nine months.
The brokerage listed out the following factors behind its bullish stance.
A. Trent: Leading with Distinction: Trent reported strong Q2FY25 results, with revenue increasing 40% YoY to Rs 4,036 Cr and EBITDA growing 39% YoY, maintaining stable EBITDA margins of 16%. The strong performance is expected to sustain in Q3FY25 despite a challenging environment. The company’s differentiated business model, emphasis on private labels, efficient store economics, and rapid inventory turnover continues to outperform peers. Consistent leadership in key metrics such as revenue per store and margins positions Trent well for sustained growth, supported by its high-quality offerings and strategic expansion initiatives.
B. Zudio: Fast fashion revolutionised- Zudio has emerged as the key growth driver for Trent in recent years, driven by its fast fashion proposition targeting college students with affordable yet trendy apparel. This strategy has successfully attracted high footfall, while its cluster-based approach enables significant economies of scale. The brand’s distinct appeal and value-driven offerings continue to strengthen its dominance in the fast fashion segment.
C. Extensive retail network- Trent operates an extensive store network comprising 226 Westside stores, 577 Zudio stores, and 74 Star stores as of Sep’24, demonstrating the company’s commitment to reaching a broad customer base across diverse retail segments.
D. Outlook: Trent’s revenue performance remains impressive. Strong results are expected in the coming quarters, supported by the festive season. With its ongoing focus on store expansion and product assortment enhancement, Trent is well-positioned for growth across all its formats.
On the other hand, brokerage HDFC Securities has a sell call on Trent with a target price of Rs 4160.
HDFC Securities sees Trent's revenue to grow 40.1% YoY (5-year CAGR: 39.8%) to Rs 46.4 billion. It estimates strong 10.2/63% YoY growth for Westside and Zudio respectively. They are building in 43% Gross Margin for Q3FY25 (vs 46% in Q3FY24). They are also building in 14.3% EBITDA margin (vs. 18.8% in Q3FY24).
The brokerage has retained its sell call on Trent but raised target price to Rs 4,160 from Rs 3,850.
Kotak Equities has downgraded 'Trent' to Sell from 'Add'. It has trimmed price target to Rs 5850 from the earlier Rs 6800
The brokerage said the strong growth story of the firm is now fully priced in. There are too many stores in select urban pockets and Westside store additions have disappointed.
Star store additions have also been below expectations, it added while paring cut FY25-27 revenue estimates by 1-2% and EPS by 9-14%. The brokerage also mentioned that after the fantastic run-up in the stock price, it may be time to book profits.
Global brokerage Goldman Sachs has assigned a buy call on Trent with target price of Rs 8,000.
"Goldman Sachs expects Zudio to grow at 28% CAGR over FY24-35E to reach Rs 1 trillion in sales. Westside is likely to continue to deliver steady low double-digit sales growth. Sustainable margins of Trent's Fashion & Lifestyle business could also be higher as Zudio stores mature. Star may have long-term potential, but will not see Zudio-like store growth and will likely face stiff competition from the quick commerce players," said Goldman Sachs.