Trent shares at Rs 6,600 or Rs 7,200? Targets for Tata stock post Investor Day

Trent Ltd shares are in focus on Thursday morning following the Tata group firm's Investor Day. Stock analysts attending the Trent event said its management provided valuable insights into their growth strategies and KPIs, notably emphasising market share over like-for-like (LFL) growth. They also highlighted the critical role of hygiene and quality in the Star initiative as central to driving store traffic via its fresh offerings. 

"Looking ahead, Zudio appears to be the primary growth engine. The financial viability of smaller store concepts—Samoh and Zudio Beauty—has not been conclusively proven yet to warrant aggressive expansion," Nuvama said.  

MOFSL said despite robust growth over the past few years (6.5 times revenue growth over FY19-25), the management indicated that Trent’s share in India’s fashion and lifestyle retail industry remains in low-single digits. 

The company believes there is still a long runway for growth and aims to grow at 25 per cent-plus annually over the longer term through a multi-brand, cluster-based approach to increase its market share in key micro-markets. 

MOFSL said the management is cognizant of the impact on return metrics of their cluster focus approach, but believes there is enough headroom to drive operating leverage in the business. 

"The company remains bullish on the growth opportunity in the Star format, but will continue to grow sensibly while focusing on the right metrics and improving its differentiation through a rising share of non-third-party brands (73 per cent currently). We continue to like Trent for its superlative execution and long growth runway. Reiterate BUY with an unchanged target price of Rs 6,900," it said.

Trent shares are down over 30 per cent from October 2024 peak. The stock is up 9 per cent in the past three months, much in line with stock market indices.

Macquarie has suggested 'Outperform' on the stock with a target price of Rs 7,200. Nuvama said it remains optimistic on the business outlook and, hence, adjusted its revenue estimate for FY27 by 0.4 per cent and trimmed PAT by 4 per cent. Its revised target works out to Rs 6,627 from Rs 6,224 earlier.

Nirmal Bang Institutional Equities does not rate Trent. It noted that the stock trades at 130 times FY25E EPS of Rs 43.20. Basis consensus expectations, Trent trades at a rich valuation of 94 times/72 times on FY26/FY27 EPS of Rs 59.80/Rs78.10, respectively.