Trent shares: Up 1,000% in 5 years, can this Tata group stock rise further?

Trent Ltd shares have seen 200 per cent rally in the last one year and with Thursday's intraday gains, the five year return for the Tata group stock has moved past 1,000 per cent. Trent's Q3 beat belied the slowdown in consumption spends, yet again. New concepts in ethnic wear and innerwear may keep the revenue trajectory higher for longer, analysts said who see over 30 per cent sales growth over FY24-26.

The ongoing rally on the counter has more legs, they said while suggesting share price targets in the Rs 3,800-4,400 range.

Motilal Oswal Securities said it is factoring in 30 per cent revenue growth and 31 per cent Ebitda growth over FY24-26, based on strong revenue productivity, aggressive store additions, margin tailwinds from moderating raw material cost, and operating leverage.

"The continued momentum within Star and improving store metrics offer further upside potential," it said while suggesting a target of Rs 4,200 on the stock.

Kotak Institutional Equities raised its FY24-26 EPS estimates by 15-18 per cent, largely on better-than-expected margin performance. This, coupled with higher other income and roll-forward to March 2026 estimates, leads Kotak to a revise its fair value on the stock to Rs 3,800 from Rs 2,700 earlier. Kotak assumes higher medium-term margins and said new concepts being seeded by Trent can keep revenue trajectory higher for longer.

"The strong performance drives a reset of margin expectations, leading to a 20 per cent/24 per cent increase in EPS for FY24E/25E. Valuing Trent’s standalone business at 80 times FY26 PE and ascribing a separate value to subsidiaries/JV yields a revised target of Rs 4,304 (earlier Rs 3,530).

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Sharekhan said Trent has continued its strong growth momentum in Q3FY2024 amid sluggish demand environment, registering 50 per cent-plus revenue growth, a sharp expansion in Ebitda margin and 2.1 times YoY growth in profit. Innovation in product portfolio, 100 per cent contribution from own brands, aggressive store expansions, scaling up of the Star business and leveraging on digital presence will be key growth drivers in the medium term, it said,

"With long-term growth prospects intact and a strong balance sheet among the retail companies, we maintain a Buy recommendation on the stock with a revised price target (PT) of Rs 3,970," it said.

On Thursday, the stock rose 7 per cent to hit a high of Rs 3,862.45 on BSE.

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