Value retail player Trent Ltd's latest business update for the September quarter failed to impress brokerages, which trimmed their target prices on the Tata group company's stock.
Trent expects its Q2FY26 standalone revenue to rise 17 percent year-on-year to Rs 5,002 crore, marking its slowest growth since March 2021. The company’s first-half revenue grew 19 percent to Rs 10,063 crore.
The latest quarterly growth falls short of its 25 percent long-term target and trails the 20 percent increase reported in Q1, as the retailer faces intensified competition in fashion and lifestyle.
At 9.25 a.m., shares of Trent were quoting Rs 4,636.8, lower by nearly 3 percent on the NSE compared to the previous session's closing price.
Morgan Stanley maintained an Overweight rating on Trent but cut its target price to Rs 5,892 per share. The brokerage noted that Q2FY26 standalone revenue fell significantly short of expectations of 25 percent growth, with revenue growth sharply decelerating from previous quarters.
On the expansion front, Westside added six new stores during the quarter, marking its highest addition in five years, while Zudio opened 40 new stores, surpassing expectations of 31 openings. Morgan Stanley expects standalone EBITDA margin to expand by 165 basis points year-on-year to 17.3 percent in FY26, up from 15.65 percent.
Domestic brokerage Equirus downgraded Trent to ‘reduce’ from ‘add’ and slashed its target price to Rs 4,474 from Rs 5,759, citing signs of growth fatigue. The brokerage noted that Q2 marks the fifth straight quarter of sequential slowdown, with standalone revenue growth of 17 percent, the weakest in 18 quarters.
It said the earlier projection of a 26 percent topline CAGR over FY25–27 now looks difficult to achieve and expects valuation multiples to compress amid earnings downgrades and moderating growth.
While Motilal Oswal maintained its 'buy' call, the brokerage said, "We note that store additions typically pick up pace in 2H, and all eyes would be on a further scale-up of Trent’s fashion footprint as store expansion remains its biggest growth driver amid weakening SSSG."
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