Buy Trent; target of Rs 5100: Motilal Oswal

Motilal Oswal's research report on Trent

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. The company remained focused on being relevant to the customer needs, and hence, the store additions will not be a challenge for TRENT. It will be growing with a lighter balance sheet (FOCO/COCO model), which will be able to deliver a higher ROCE. The company will continue to expand the Westside, Zudio, and Star formats in the coming years. Huge market opportunity

Outlook

We assign 52x EV/EBITDA to the standalone business (Westside and Zudio), which is at a premium over our Retail Universe, given its superior growth, 2x EV/sales to Star Bazaar, and 15x EV/EBITDA to Zara on FY26E, and arrive at our TP of INR5,100. Adjusting for Star and Zara’s value, the stock is trading at 80x P/E on FY26E for the standalone business. Reiterate BUY.