Brokerage Report On Trent
Recent brokerage reports on Trent reflect a consensus view of strong long-term growth potential, primarily driven by its fast-expanding Zudio and steady Westside formats. However, some analysts have recently downgraded their ratings or maintained a cautious stance due to moderating growth rates and concerns over premium valuations.
Key takeaways from recent reports
Analyst recommendations
- Motilal Oswal: Reiterated a “Buy” rating with a target price of ₹6,650 in July 2025.
- HSBC: Maintained a “Buy” rating with a target price of ₹6,500 in August 2025.
- Jefferies: Kept a “Hold” rating while raising its price target to ₹6,000 in August 2025. The firm remains on the sidelines due to high valuations, despite strong long-term growth potential.
- Geojit BNP Paribas: Downgraded the stock to “Hold” in August 2025, setting a price target of ₹5,745.
Key growth drivers
- Aggressive Zudio expansion: Brokerages see the value fashion brand Zudio as the primary engine for future growth. Trent’s store count for its fashion formats surpassed 1,000 in FY25, with Zudio leading the charge. Management aims for 25%+ annual revenue growth in the long term, with plenty of headroom for Zudio to expand into Tier-2 and Tier-3 cities.
- Resilient formats: The Westside brand continues to perform well, with strong double-digit same-store sales growth (SSSG) in recent quarters, although it has shown some moderation. The Star grocery format is also cited for its growth potential.
- Emerging categories: The company is scaling up emerging categories such as beauty products (Zudio Beauty) and lab-grown diamonds (Pome), which now make up about 20% of revenue.
Areas of concern
- Slowing momentum: Trent’s growth rate has moderated in recent quarters due to a higher base effect and a slowdown in same-store sales growth. Same-store sales growth for fashion formats moderated to mid-single digits by Q4 FY25.
- High valuation: The stock’s premium valuation is a common concern among analysts. Despite strong growth, its high price-to-earnings (P/E) ratio makes it sensitive to negative news or market corrections.
- Margin pressure: Margins have faced pressure, partly due to a higher mix of the lower-margin Zudio format and increased competition.
- Market competition: Trent faces intense competition from other retailers like DMart, Reliance Retail (Trends), and online players.
Recent performance highlights (Q1 FY26)
- Revenue: Up 19% YoY to ₹4,883 crore.
- Net Profit: Up 9% YoY to ₹425 crore.
- Store expansion: Added 11 Zudio stores, but also closed 10 Zudio stores, indicating a rationalization process.
Investment outlook
Overall, the long-term growth story for Trent remains intact, supported by its strong brand portfolio and aggressive store expansion strategy, particularly with Zudio. However, the recent moderation in growth and high valuation warrant caution. Analysts generally recommend a “Buy” or “Hold” rating, but emphasize the importance of monitoring same-store sales growth and the impact of intense competition. Investors should consider the premium valuation as a key risk factor.
Disclaimer
This is a summary of recent brokerage reports and does not constitute financial advice. Investors should conduct their own due diligence before making investment decisions.
PLEASE CONSULT YOUR FINANCIAL ADVISOR : Investors are encouraged to conduct thorough independent research and consult with financial advisors before making any investment decisions.