The Tata group’s retail player Trent will share its earnings report for the first quarter of the current fiscal year on August 9. The retail major is likely to report industry leading revenue growth.
According to a Moneycontrol poll of five brokerages, Trent is likely to report a revenue growth of 45.7 percent at Rs 3,695 crore. Net profit is likely to come in at Rs 294 crore from Rs 148 crore from the corresponding quarter last year, jumping 98 percent on-year.
Earnings estimates of analysts polled by Moneycontrol are in a narrow range, so any positive or negative surprises may elicit a sharp reaction in the stock. The most optimistic estimate sees Trent’s net profit more than doubling at 117.8 percent on-year.
What factors are impacting the earnings?
The topline is expected to surge as a result of retail expansion in Zudio and healthy store productivity levels, noted experts.
Store Expansion: Healthy revenue growth is expected to continue due to store expansion. It is anticipated that Westside and Zudio will expand their presence by adding between 5 and 45 new stores during the first quarter of fiscal year 2025.
The revenue from Westside is likely to grow 18.7 percent YoY, while Zudio revenues are expected to grow 72.5 percent on-year, said Motilal Oswal.
Margins: Gross margins are expected to contract around 50 basis points, as a result of a 61 percent increase in employee expense on-year and a 49 percent increase in other expenses (incl. rent expenses).
Outperformance: As a result of solid, continued demand for Westside and Zudio, Trent’s expected revenue growth will likely outperform all other competitors, such as ABFRL, DMart, or even Shoppers’ Stop. Trent is also expected to be an outlier in terms of store additions during the quarter.
What to look out for in the quarterly show?
Analysts will closely monitor demand and the commentary on demand trends in metro areas and tier-3 towns. They will also pay attention to store expansion plans.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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