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Trent hits 3-month low post Q2 results, share price down 25% in 1 month; Should you buy?
Trent shares fall 10% in two days after Q2 results
Shares of Tata Group’s Trent Ltd. are down another 3.5 per cent on Friday, November 8, carrying on from Thursday’s fall of 6.5 per cent. With Friday’s fall, the stock has declined 10 per cent in the last two trading sessions.
The stock price of Trent is trading at its lowest level since August 9, 2024. In one week, the stock has declined 12 per cent as compared to nearly 1 per cent rise in the BSE Sensex. The market price of Trent has corrected 25 per cent from its record high level of Rs 8,345.85 that it touched on October 14, 2024.
Despite the recent fall, Trent share price has outperformed the market thus far in the calendar year 2024, by zooming 110 per cent as against 10 per cent gain in the benchmark index.
In Q2 FY25, fashion and lifestyle retailer Trent’s profit before tax (PBT) jumped 49 per cent year-on-year (Y-o-Y) at Rs 467 crore during the quarter. In Q1 FY25, the company’s PBT had more-than-doubled, rising 136 per cent, to Rs 501 crore.
Its revenue from operations rose 39.4 per cent to Rs 4,156.67 crore in Q2 FY25 over the same period last year as both its retail chains Westside and Zudio registered double-digit like-for-like growth despite business seasonality.
On a standalone basis, Trent’s revenue and PBT grew by 39 per cent and 48 per cent over the year ago quarter. In the previous quarter, the company had posted 56 per cent growth in revenue and 133 per cent jump in PBT.
The management said that the consumer sentiment has remained relatively muted. This, coupled with seasonality, has meant that retail businesses faced headwinds. In the forgoing context, the team has delivered strong results across brands, concepts, categories and channels in Q2.
Trent is part of the Tata Group and operates a portfolio of retail concepts. The primary customer propositions of Trent include Westside, one of India’s leading chains of fashion retail stores; Zudio, a one-stop destination for great fashion at great value; and Star, which operates in the competitive food, grocery and daily needs segment.
In Q2 FY25, Trent delivered strong results despite muted consumer sentiment and seasonality challenges, which impacted the retail sector. This performance was driven by successful expansion plans and a focus on offering fashionable products at affordable prices, said Akriti Mehrotra, research analyst at StoxBox.
Key milestones during the quarter included the launch of the first international Zudio store in the UAE and the introduction of Zudio Beauty in India, reflecting the company’s commitment to expanding its brand footprint and exploring new growth opportunities. The Star business, leveraging Trent’s proven strategy, has seen strong customer traction, with the success of its own-branded products supporting growth, the brokerage firm said.
Management is confident that the Star business can continue to accelerate and deliver significant value to both customers and shareholders. Looking ahead, the company remains optimistic about the potential of its direct-to-consumer business, especially with its expanding store network. Key focus areas include demand trends across metros and Tier 2/3 towns, as well as the progress of store expansions, which are crucial for future growth, analysts said.
According to Motilal Oswal Financial Services, Trent’s industry-leading growth, driven by healthy SSSG, store productivity, and robust footprint additions, along with the scale-up of Zudio and newer categories (Beauty, Lab-grown diamonds), offer a huge runway for growth over the next few years.
Brokerage firm Jefferies maintained its “hold” rating on Trent with a price target of Rs 5,900. Jefferies’ price target implies a further 9.3 per cent downside from Thursday’s closing levels on Trent.
Jefferies said that Trent missed elevated growth estimates even while growth remained strong during the quarter. The company also closed stores in both the key fashion formats.
The management though, remains confident of the growth opportunity, Jefferies said.
Shares of Trent are trading 3.1 per cent lower on Friday at Rs 6,306. The stock has now corrected 25 per cent from its recent record high of Rs 8,345.
