Trent's price tag has a 10 percent upside as Motilal Oswal retains 'Buy'

Trent plans to maintain a slower pace of expansion for Utsa, Misbu, and Samoh

Trent remains a 'Buy' for Motilal Oswal with a target of Rs 5,500, as it is outperforming peers despite seeing muted demand in the discretionary category, the brokerage said in a note on June 13.

At 9.33 AM, shares of Trent traded nearly a percent lower at Rs 4,986, but have gained 68 percent in past six months, massively outperforming the benchmark Nifty 50.

Motilal Oswal note said that Trent has gained market share compared to rivals, particularly in the value apparel segment. Trent's strong performance comes even as it is aggressively expanding the store presence.

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Trent has added a gross total of 30 Westside stores and 203 Zudio stores in FY24, as guided in last year’s AGM. The total standalone store count now stands at 811.

The Motilal Oswal note says Trent aims to maintain the pace of store additions, targeting 30 Westside stores and 200 Zudio stores annually. Despite this robust expansion, there is no observed deterioration in Trent's store economics, MOFSL note added.

The company plans to maintain a slower pace of expansion for Utsa, Misbu, and Samoh brands until the perfect model, pricing, and other relevant factors for these are developed, Motilal Oswal note said.

The management aims to add 20-25 stores in FY25.

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Trent reiterated that the 'Star' brand will serve as its third engine of growth. Motilal Oswal said that Star Bazaar might need external funding for its expansion for another year, but thereafter, it should be able to fund growth internally, given the sizable Rs 76 trillion grocery market.

Star Bazaar is a retailer for fresh food and groceries with 48 stores across Mumbai, Pune, Bangalore, Kolhapur, and Hyderabad, which also offers other Tata brands.

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