Multibagger Tata Group stock slips 12% this year, time to book profit?

Shares of Tata Group's retail arm Trent Ltd are down 12% this year. The short-term weakness in Trent extends till 3 months with the stock losing 20.25% during the period. However, Trent shares have delivered multibagger returns of 419%, 435% and 954% in two years, three years and five years, respectively. Trent stock hit a record high of Rs 8,345.85 on October 14, 2024. It has lost 25.39% since then.

The multibagger Tata Group stock is trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages. 

It has seen high volatility in the last one year with a beta of 1.1. Trent shares are neither overbought nor oversold on charts with a RSI of 38. 

The stock resumed its bear run in the current session. Trent stock slipped 3% to Rs 6152 against the previous close of Rs 6391.50 on BSE. Market cap of the firm fell to Rs 2.20 lakh crore. The stock had fallen for eight straight days prior to the previous session. 

Brokerage HDFC Securities has a sell call on Trent with a target price of Rs 4160.

HDFC Securities expects Trent revenue to grow 40.1% YoY (5-year CAGR: 39.8%) to Rs 46.4 billion. It estimates strong 10.2/63% YoY growth for Westside and Zudio respectively. They are building in 43% Gross Margin for Q3FY25 (vs 46% in Q3FY24). They are also building in 14.3% EBITDA margin (vs. 18.8% in Q3FY24). 

The brokerage has retained its sell call on Trent but raised target price to Rs 4,160 from Rs 3,850.

Kotak Equities has downgraded 'Trent' to Sell from 'Add'. It has reduced price target to Rs 5850 from the earlier Rs 6800
The brokerage said the strong growth story of the firm is now fully priced in. 
The brokerage said there are too many stores in select urban pockets and Westside store additions have disappointed. 

Star store additions have also been below expectations, it added while paring cut FY25-27 revenue estimates by 1-2% and EPS by 9-14%. The brokerage also mentioned that after the fantastic run-up in the stock price, it may be time to book profits. 

Goldman Sachs has a buy call on Trent with target price of Rs 8,000.

 "Goldman Sachs expects Zudio to grow at 28% CAGR over FY24-35E to reach  Rs 1 trillion in sales. Westside is likely to continue to deliver steady low double-digit sales growth. Sustainable margins of Trent's Fashion & Lifestyle business could also be higher as Zudio stores mature. Star may have long-term potential, but will not see Zudio-like store growth and will likely face stiff competition from the quick commerce players," said Goldman Sachs.  

Net profit climbed 47% to Rs 335 crore in Q2 against Rs 228 crore in the corresponding quarter of the previous fiscal. Revenue rose 39% to Rs 4157 crore in Q2 against Rs 2982 crore in the corresponding quarter of the previous fiscal. Trent's EBITDA stood at Rs 643 crore, largely in-line with estimates of Rs 675 crore and EBITDA margins too, were mostly in-line with expectations of 15.7% at 15.5%. During the same quarter last year, Trent had reported margins of 15.3%.