Trent, a prominent player in the retail sector, is currently facing challenges in the stock market, yet Motilal Oswal remains optimistic about its future. They have issued a "Buy" recommendation on Trent’s shares, setting a target price of ₹6,800 per share, which suggests a potential upside of 22% from its current valuation. Despite concerns regarding a decline in sales for the upcoming quarter, the brokerage is excited about the company’s aggressive plans for store expansion.
Why Motilal Oswal Recommends Buying Trent Stock
Strong Revenue Growth Amid Challenges
According to recent insights from Motilal Oswal, Trent’s standalone revenue for Q4 FY25 (including GST) surged by approximately 28% year-on-year, reaching ₹43,300 crore. Although this growth rate has dipped from 36% in the previous quarter, it still indicates robust performance amid a general market slowdown. The brokerage attributes the slowdown to a decline in same-store sales growth (SSSG), which fell from high single digits recorded in Q3.
- Q4 FY25 Revenue: ₹43,300 crore (28% YoY growth)
- Q3 FY25 Revenue Growth: 36%
- SSSG Decline: From high single digits in Q3
Aggressive Store Expansion Strategy
In an impressive move, Trent opened 136 net new stores in Q4 FY25, marking a 29% rise compared to the same quarter last year. Their flagship brand, Zudio, has been particularly active, adding 132 stores in this quarter alone, bringing its total to 765—a significant 40% YoY increase. Meanwhile, Westside contributed with a net addition of 10 stores, totaling 248 stores, reflecting a 7% YoY growth.
- New Stores in Q4 FY25: 136
- Total Zudio Stores: 765 (40% YoY increase)
- Total Westside Stores: 248 (7% YoY increase)
Consistent Yearly Performance
For the entire fiscal year of FY25, Trent achieved a standalone revenue of ₹176,000 crore, which translates to a growth of 39% compared to the previous fiscal year. The company also added 232 net stores throughout the year, culminating in a total of 1,043 stores, a 29% increase year-on-year. Motilal Oswal highlights that Trent has been focusing on larger Westside stores, indicating a strategic bet on urban consumer recovery.
- FY25 Total Revenue: ₹176,000 crore (39% growth)
- Net Store Additions in FY25: 232
- Total Stores: 1,043 (29% YoY increase)
Current Stock Performance
Despite the optimistic outlook from Motilal Oswal, Trent’s stock has seen a significant decline, dropping over 15% in intraday trading. In a short span, the stock has fallen nearly 14% over the past five days, with a 5% decrease over the last month.
- 6-Month Decline: 36%
- Year-to-Date Decline: 33%
- 52-Week High: ₹8,345
- 52-Week Low: ₹3,894.90
- Market Capitalization: Approximately ₹1.69 lakh crore
Trent’s journey has been tumultuous, showing both volatility and moments of recovery, with the stock once rising 21% during this period. Investors will need to stay alert as the company navigates the current challenges while pursuing its expansion strategy.
In summary, while Trent currently faces market pressures, the combination of strong revenue growth and an ambitious expansion plan could make it a compelling buy for forward-thinking investors.
