Trent: Amid falling FII stake, Tata Group multibagger up 38% from March low; price targets

Shares of Trent Ltd with 409% returns in five years are almost flat in period up to two years.  In fact, the Trent stock has slipped 17% in a year and 30% in two years. However, the stock has surged 38% from its 52-week low of Rs 2185 in over four months. The retail sector stock attracted investor interest due to strong financial performance, fast expansion of the Zudio value-fashion chain, and an ambitious 10 times growth vision outlined by Chairman Noel Tata.

Zudio has expanded its retail footprint rapidly, with its store network growing at a four-year compound annual growth rate of around 42% to 982 outlets in Q1FY27 from 243 in Q1FY23. The fashion retail chain now has a presence across 321 cities, including three locations in the UAE, while its total retail area has surpassed 10.8 million square feet.

On similar lines, the Tata Group firm logged a 26% rise in net profit to Rs 532 crore in Q1. Expansion of Westside and Zudio brands beyond metropolitan cities led to offsetting the pressure from rising raw material costs. The firm reported a net profit of Rs 423 crore in the year-ago period.

Revenue from operations rose 18.5% to Rs 5,666 crore in Q1FY27 against Rs 4,781 crore in Q1FY26.  Trent's April-June operating EBITDA came at 8.47 billion, rising 36% year on-year. Operating EBIT rose 33% to Rs 732 crore on a year on year basis. 

DII, FII stake in Trent 

However, falling FII stake in Trent in two years seems to have affected sentiment around the Tata Group stock. 

FII stake in the firm stood at 27.9% in the June 2024 quarter. It slipped to 15.1% in the last quarter, signaling constant erosion of foreign investor's interest in two years. 

On the other hand, DIIs cushioned the impact of DII selling with their stake in the firm rising to 14.6% in the June 2026 quarter against a stake of 8.5% in the June 2024 quarter. 

Trent share price targets 

Axis Direct has a price target of Rs 3640 on the Tata Group stock. 

The brokerage maintained its BUY rating, supported by a strong long-term  growth outlook and structural strengths in the business. However, it pared price target to Rs 3,640 per share against the previous target price of Rs 4,960 per share. 

Axis said Trent continues to post robust revenue growth despite macro headwinds. The recent correction in the stock price enhances the risk-reward profile, offering an attractive entry point for long-term investors. With structural tailwinds in organised retail and significant headroom for market share gains, Trent is well-placed to capitalise on the sector’s multi-year growth opportunity. 

Brokerage Nuvama said management did indicate rising input costs that they are actively mitigating through value-chain interventions and calibrated price adjustments. The consistent margin surprise has cushioned the business from operational deleverage.

"We have tweaked our FY27 and FY28 revenue/EBITDA estimates by +0.2/+8.6% and +1.1%/+8.3%, respectively and arrive at a target price of Rs 3,591 (Rs 3,219 earlier); maintain ‘BUY’," said Nuvama. 

Elara Securities has a price target of Rs 3,500 with an accumulate rating on the stock. 

"With the worst of competitive intensity behind us, we believe Trent has the potential to sustain growth 20% in FY26-29E, supported by its aggressive store rollout and expanding addressable market. We retain Accumulate with a TP of Rs 3,500 based on 64x P/E to Sep-28E for the standalone business, 2.0 EV/Sales for Star Bazaar and 40x P/E for Zara & Massimo Dutti. A rapid LFL recovery and stronger adoption of fast fashion across non-metros remain key triggers and could drive earnings and valuation upgrade, said Elara. 

Brokerage Macquarie has maintained its 'Outperform' call on Trent with a target price of Rs 3,600. 

The brokerage remains positive on Trent's approach of balancing profitability with growth. The company has several avenues to protect margins, giving it confidence that it can absorb near-term increases in input costs without a significant impact on profitability, Macquarie noted.