Trent Ltd. share price target

With a 12% upside potential from the CMP, we maintain our BUY rating on the stock.

Trent continued to report strong standalone/consolidated revenue growth of 55%/50% YoY to INR119b/INR124b in FY24, aided by 51% YoY area addition and +10% LFL growth. Despite a slight contraction in standalone gross margin by 20bp (due to higher Zudio mix), EBITDA margin (pre Ind-AS) improved to 11.7% (up 300bp YoY), aided by lower ad spending and operating leverage.

Trent continues to post strong standalone/consolidated revenue growth of 55%/50% YoY to INR119b/INR124b in FY24, aided by 37% YoY store addition and 10% LFL growth.

We retain Buy rating on Trent with a revised PT of Rs. 5,838. Consistent industry outperformer and strong growth levers makes it a strong play in lifestyle fashion space. Stock trades at 58x/44x its FY2025E/26E EV/EBITDA, respectively.

We met with the CEO and CFO of Trent Limited (TRENT), Mr. P. Venkatesalu and Mr. Neeraj Basur, who stated that the opportunity in the value retail space is still
substantial, with the company’s market share at 2%/8% of total/organized retail value market size.

Back-to-back 10% SSSG since last three quarters is impressive (significant outperformance vs peers). Retail expansion has been in line with expectations (added 203 Zudio stores and 30 Westside in FY24).

We remain positive on the company and expect Revenue/EBITDA growth of 32%/39% CAGR on a standalone business over FY23-26E. We maintain our BUY rating on the stock and value the company on a SOTP basis with a revised TP of Rs 4,800/ share. Our TP implies an upside of 11% from the CMP.

Trent posted yet another stellar quarter in Q4FY2024 with revenues growing by 53% y-o-y to Rs. 3,187 crore, EBITDA margin rising sharply by 477 bps y-o-y to 15% and adjusted PAT growing by 2.75x y-o-y to Rs. 289 crore.

TRENT reported strong standalone revenue growth of 53% (in line) in
4QFY24, led by 10% LFL and 37% YoY store additions. Robust revenue
growth, along with GM improvement and operating leverage, resulted in
2.3x/2.4x YoY growth in EBITDA/PAT (11%/31% beat).

Trent posted yet another stellar quarter in Q4FY2024 with revenues growing by 53% y-o-y to Rs. 3,187
crore, EBITDA margin rising sharply by 477 bps y-o-y to 15% and adjusted PAT growing by 2.75x y-o-y to Rs. 289 crore.