Tata Group’s retail arm Trent has seen its shares perform exceptionally well on Dalal Street this year, rewarding its shareholders with a return of 61.7%, appreciating from ₹1,358 per to ₹2,196 each.
Impressively, the stock has consistently delivered positive returns every year since 2014. Among these, 2017 marked the highest return at 68.24%, closely followed by 2021 with a 55% gain.
Looking at performance in the current year, Trent’s stock has shown strength in 7 of the last 10 months. The outstanding months were August, which saw a robust gain of 16.60%, and May and June, with returns of 14.09% and 13.05% respectively.
This year (CY23), the company’s market capitalization has increased ₹29,791 crore, reaching ₹78,067 crores. Considering the peak price of the shares of ₹2,210, its market capitalization touched ₹78,565 crores.
Trent operates a portfolio of retail concepts. Trent’s key customer offerings include Westside, one of India’s leading fashion retail chains, Zudio, a one-stop destination for great fashion at great value and Trent Hypermarket, which operates in the competitive food, grocery and daily necessities segment below. the Star banner.
For the June quarter, the company posted a healthy performance, with net profit growing 45% YoY and 271% QoQ to ₹167 crores. During the quarter, Trent’s fashion concepts (Westside, Zudio, and other lifestyle stores) recorded encouraging LFL growth of over 12% YoY.
Domestic brokerage firm HDFC Securities highlighted Trent’s continued commitment to enhance its value proposition, which is reflected in its financial performance. The company continues to pass on the benefits of supply margins to consumers while effectively reducing retail costs.
“That said, the share price suggests that investors appear to be suspending disbelief on the sustainment of KPIs/earnings power as Zudio’s sales density appears to be stretched at. ₹18,000/sq. ft. (our proprietary store map suggests expansion in two years is likely to come at lower sales density, ergo, lower unit economics), and 58% of FY22 and FY23 PAT came from Inditex dividends and markups on fixed assets sold to franchisees. ; these are unlikely to continue in the medium to long term (at least the quantum),” the brokerage said in its October report.
The brokerage firm projected revenue and PBT CAGR of 27% and 12%, respectively. Its target price, based on a sum-of-the-parts (SOTP) analysis, is set at ₹1,370 per piece, indicating a significant downside of 37.61% for the stock. It continued with its “sell” rating on the stock.