Trent Ltd. Surges Ahead in Q1 FY24: Strong Financials and Broker Confidence Fuel Stock Growth

Overview: Trent’s Remarkable Growth in Q1

Trent Ltd., a part of the Tata Group, has been on an impressive growth trajectory, as evidenced by its first-quarter financial performance for FY24. The company reported a staggering 135% year-on-year (YoY) increase in net profit, reaching ₹391.21 crore. Additionally, Trent’s revenue from operations surged by 56% YoY, totaling ₹4,104.44 crore. The company’s aggressive expansion strategy was also on display, with the opening of 25 new stores during the quarter, including six Westside stores and 16 Zudio stores across 12 cities.

Market Reactions: Brokerages Weigh In

Trent’s strong financial performance has garnered positive reactions from several leading brokerages, which have largely maintained or upgraded their ratings and target prices for the stock.

Nuvama: A Strong Buy with Increased Targets

Nuvama was particularly bullish on Trent, maintaining a “buy” rating and raising its target price to ₹7,136. The brokerage highlighted Trent’s industry-leading performance, particularly noting the double-digit same-store sales growth (SSSG) and a 35% increase in retail area. The Star Bazaar segment also performed well, registering a 22% SSSG. Given these strong results, Nuvama revised its revenue estimates for FY25 and FY26 upward by 6.7% and 20.5%, respectively. Additionally, the brokerage adjusted its net profit estimates, increasing them by 31.1% for FY25 and 44.2% for FY26.

Axis Securities: Bullish Outlook with Target Price Upgrade

Axis Securities also retained its “buy” rating on Trent while significantly raising the price target from ₹4,800 to ₹7,000. The brokerage expressed optimism about Trent’s future performance, stating that the company’s Q1 results exceeded expectations in both revenue and profit. Axis Securities anticipates that Trent’s strong growth momentum will continue in the coming quarters, bolstered by its robust financial performance and strategic store expansion.

Motilal Oswal: Confidence in Sustained Performance

Motilal Oswal echoed similar sentiments, maintaining its “buy” rating with a target price of ₹7,040. The brokerage underscored Trent’s ability to deliver strong results despite a challenging retail environment, where many other retailers reported weaker consumption trends. Motilal Oswal’s confidence in Trent’s continued success is based on the company’s consistent performance and effective execution of its growth strategies.

Jefferies: A Cautious Hold Amid Strong Growth

Jefferies offered a more cautious perspective, maintaining a “hold” rating but raising the target price to ₹5,750. While acknowledging that Trent’s revenue exceeded expectations with strong margins, Jefferies noted that the store additions were relatively soft, particularly for Westside, which experienced higher net closures, and Zudio, which had subpar additions during the quarter. The brokerage remains optimistic about Trent’s growth momentum but expressed concerns over the stock's expensive valuation, which has led to a more reserved stance.

Morgan Stanley: Equal Weight with Focus on Expansion

Morgan Stanley took a balanced approach, maintaining an “equal weight” rating with a target price of ₹4,812. The brokerage pointed out Trent’s management guidance, which emphasizes continued expansion and deepening of its store presence. Morgan Stanley highlighted the fashion segment’s strong double-digit like-for-like (LFL) growth, with 10% in Q4 and Q3. The grocery segment also showed promising signs of improvement, with increased customer traction and higher sales densities. Despite these positive developments, Morgan Stanley’s cautious stance reflects a measured outlook on Trent’s valuation.

Stock Performance: Trent Hits New Highs

Reflecting the market’s confidence in Trent’s future prospects, the company’s stock rose by 1.14% to ₹6,346.95 on Monday morning. The upward momentum continued, with Trent shares reaching a new all-time high of ₹6,434. This milestone underscores the positive sentiment surrounding the company, driven by its strong financial performance and promising growth outlook.

Conclusion: Trent’s Strategic Positioning for Continued Success

Trent’s exceptional Q1 performance, marked by significant revenue growth, robust profit margins, and strategic store expansions, has positioned the company as a strong contender in the retail sector. The positive sentiment from leading brokerages further reinforces Trent’s growth potential, with many expecting continued strong performance in the coming quarters. As the company continues to execute its expansion plans and capitalize on its industry-leading position, Trent remains a compelling investment opportunity in the Indian retail market.

For investors and market watchers, Trent’s strategic initiatives and consistent performance make it a stock to watch closely. The company’s ability to navigate the challenges of the retail sector, coupled with its aggressive growth strategy, suggests that Trent is well-positioned for long-term success. As the Indian retail landscape continues to evolve, Trent’s focus on innovation, expansion, and customer engagement will likely drive sustained growth and profitability in the years ahead.