Trent shares: Up to 30% upside on this Tata group stock likely, say analysts

Analysts on Dalal Street retained their bullish view on Trent Ltd after the company on Thursday reported a consolidated net profit of Rs 45.01 crore for the quarter that ended March 31, 2023. The Tata group firm had posted a loss of Rs 20.87 crore in the same quarter a year ago. Consolidated revenue from operations increased 64.26 per cent YoY to Rs 2,182.75 crore in Q4FY23.

On the other hand, the standalone revenue of the company increased 75 per cent YoY to Rs 2,077.21 crore during the quarter under review. Meanwhile, standalone net profit came at Rs 105.13 crore in Q4FY23 against Rs 74.87 crore in Q4FY22.

Systematix Institutional Equities retained a bullish view on Trend post Q4 results with a target price of Rs 1,738, indicating a 29 per cent upside from the current market price of Rs 1,346. “We continue to like Trent for its industry-leading operating metrics (best-in-class SSSG and balance sheet), albeit better disclosures from the company would give us a lot more clarity and add to our conviction. Trent has accelerated its pace of store openings, as it targets a bigger share of the fast/ value-fashion pie through Westside and Zudio,” the brokerage said.

It further added that Star Bazaar’s improving trajectory, coupled with higher traction in Zara, should aid industry-leading growth over the medium term.

“We are building in revenue and EBITDA CAGR of 27 per cent and 34 per cent over FY23-25, with RoE estimated to improve to around 22.4 per cent in FY25,” Systematix Institutional Equities said in a report.

On the other hand, Centrum Broking said that over the past years, Star has been the laggard in the Trent’s pack. It continued to incur losses. However, with tight footprint stores, sharp pricing and focus on fresh and own brand offerings Star is witnessing improved customer traction and growing sales. Store economics too are improving. Star recorded strong quarterly sales growth of 46 per cent in the quarter. Management believes Star will be the additional growth engine to the company’s portfolio in times ahead. “We expect Star to become just PAT positive by FY25,” Centrum Broking said adding it maintained a bullish stance on Trent with a target price of Rs 1,721.

“We continue to value the Standalone (Westside and Zudio) and Zara at 33 times EV/EBITDA and Star at 1.5x sales of FY25E EPS estimates to arrive at TP of Rs1,721,” Centrum Broking said in a report.

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