Trent stock check: Shares of Trent rallied five per cent on Wednesday, January 15, after domestic brokerage Elara Securities initiated a ‘buy’ rating on the Tata-owned retail major. The brokerage eyes a potential upside of 38 per cent in the next 13 months at a target price of ₹8,500.
Trent, a subsidiary of the Tata Group, is a leading player in India’s retail industry and manages well-known brands, Zudio and Westside. According to the brokerage, Zudio is set to grow ahead of peers (though at a modest pace) despite intensifying competition, led by many moats: a) a successful private label strategy, b) robust traction led by differentiated fashion, and c) prudent focus on product quality at reasonable price points and organic growth.
“Zudio shall continue to be the market leader in the fast fashion segment by a wide margin due to its edge. Also, expect Westside to continue to deliver steady show,” said Elara Securities. Trent’s expansion plans and differentiates play which will likely boost growth, makes it an attractive buy among participants.
‘As Trent gears up for expansion, we expect it to maintain industry-leading metrics due to differentiated product offerings, strong grip over processes and full reliance on private labels,” said the brokerage.
The fashion portfolio has consistently outperformed peers on key parameters – Store size, revenue per sqft/per store and EBITDA margin – by a wide margin (30-40 per cent versus the industry) along with leading headline growth. Expect this to sustain, led by firm focus on fundamentals such as: a) product market fit, b) promising quality at reasonable price points and c) faster design-to-shelf cycle.
Elara Securities expects Trent (consolidated) to post revenue/EBITDA/adjusted PAT CAGRs of 27%/29%/38% in FY24-28E (surpassing 16% growth for the apparel space). This is likely to be led by Zudio’s 37 per cent sales CAGR. Organic focus with premium growth offers robust performance amongst peers.
Quick Commerce plays should not pose a threat given the constraint of store size. “We initiate with Buy and SoTP-TP of ₹8,500 – We value the standalone business at 57x EV/EBITDA (Sep ’27E), Star Baazar at 4x EV/sales and Zara+ Massimo Dutti at 30x EV/EBITDA,” said Elara Securities.
“Slower-than-expected store addition, price war among value players and failure to gauge fashion dynamics are risks to our call,” added the brokerage.
