Trent shares in focus as Q1 results beat estimates

Trent Ltd., part of the Tata Group, has announced impressive financial results for the June quarter, surpassing market expectations. The company reported a net profit of ₹424.7 crore, marking an 8.5% increase from ₹391.2 crore in the same period last year. Revenue rose by 19% to ₹4,883 crore, compared to ₹4,104 crore a year ago. Operating performance was notably strong, with EBITDA increasing 38% year-on-year to ₹848 crore, defying projections. Margins expanded to 17.3% from 15%, surpassing the expected decline to 14.2%.

Trent's management highlighted sustainable growth prospects during an analyst meet, stating "the management, at an analyst meet mentioned that a 25% revenue CAGR would be sustainable".

This statement followed a historical five-year CAGR of 35%. Despite the subsequent 12% drop in stock value, Trent has shown resilience. During the quarter, the company added one Westside store and 11 Zudio stores, contributing to its revenue growth. This expansion strategy has been pivotal in maintaining the company's growth trajectory, reflecting its commitment to increasing market presence and consumer reach.

However, year-to-date, the stock is down by 25% and 4% over the past month. The company trades at 82 times its expected FY27 earnings, still below its 52-week high after correcting 36%.

Trent's previous business update stated "it mentioned that its standalone revenue for the quarter grew by 20% on a year-on-year basis to ₹5,061 crore". These developments underscore Trent's potential for steady growth, albeit with fluctuating stock performance. Investors remain watchful, balancing the company's strong financials against the broader market conditions.