Trent hits new record high on hopes of Nifty 50 inclusion, strong Q1 results

The company is scheduled to release its Q1FY25 results on August 9, 2024

Shares of Trent extended gains for the eighth consecutive session, rising 3.6 percent to reach a new record high of Rs 5,826 per share on July 31. This uptick is driven by expectations that the retail firm will be included in the Nifty 50 index during the September reshuffle. Over the past eight days, the stock of this Tata-group company has surged more than 12 percent.

The Nifty 50 index is reviewed twice a year based on six-month data ending January 31 and June 30. The next index reshuffle will take effect from September 30.

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According to analysts at IDBI Capital, Trent and defense giant Bharat Electronics are expected to replace LTI Mindtree and Divi's Laboratories in the September reshuffle.

As a result of this rejig, inflows into Trent and BEL could be around $429 million and $361 million, respectively, said Nuvama Alternative analysts. Conversely, LTI Mindtree and Divi's Labs could see outflows of $186 million and $213 million, respectively.

So far this year, shares of Trent have skyrocketed over 89 percent, significantly outpacing the benchmark Nifty 50 index, which rose by 14 percent during the same period.

ALSO READ: BEL, Trent likely to displace LTI Mindtree and Divi's in September 2024 Nifty rejig

In the quarter ending June, Trent is expected to report a 51.5 percent year-on-year increase in net sales to Rs 3,843 crore, driven by new store additions in Zudio and Westside. According to Kotak Institutional Equities, the company's profit is also projected to more than double, with a 155 percent YoY rise to Rs 379 crore in Q1FY25.

Strong revenue growth, coupled with fixed cost operating leverage, is anticipated to drive a 68 percent YoY increase in earnings before interest, tax, depreciation, and amortisation (EBITDA) to Rs 613 crore in Q1FY25. This will, in turn, enhance EBITDA margins by 153 basis points YoY to 16 percent in the quarter ended June.

The company is scheduled to release its Q1FY25 results on August 9, 2024.

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