Moneycontrol
Last Updated : Jul 12, 2018 03:00 PM IST | Source: Moneycontrol.com

Trent shares jump over 7% to hit record high after Jefferies upgrades to Buy, raises target

The stock price rallied 7.5 percent intraday to hit a fresh record high of Rs 377.60, taking total gains to nearly 22 percent in four consecutive sessions.

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Global research firm Jefferies has upgraded retail operations company Trent to Buy from Hold rating and also raised target price to Rs 400 from Rs 360 per share, implying 14 percent potential upside.

The stock price rallied 7.5 percent intraday to hit a fresh record high of Rs 377.60, taking total gains to nearly 22 percent in four consecutive sessions.

FY18 annual report surpassed expectations especially on margin front with Westside & Zara witnessing 310 bps YoY & 458 bps YoY improvement in gross margin, the research house said.

Increased loss in Star Bazaar was negative, but the company sees better traction in highly scalable Zudio, it added.

ICICI Securities said Westside continued to be one of the most successful, established franchises in the women’s wear category. "With steady same store sales growth (8 percent) and aggressive store addition (added 18 stores, the highest store addition historically in a single year), revenues from the Westside format grew robustly by 20 percent YoY in FY18."

Westside has proven to have one of the most profitable business models as it primarily focuses on selling private label brands, it said, adding share of private label brands has improved significantly from 80 percent in FY13 to 96 percent in FY18.

The research house further said sustained enhancement in profitability on the back of GST benefits and positive operating leverage is evident with margin profile for Trent improving quiet significantly. "For FY18, EBITDA margins improved significantly by 250 bps YoY to 9.3 percent, with return on capital employed (RoCE) increasing 260 bps YoY to 10 percent. Healthy store addition coupled with steady SSSG is expected to drive revenues, going forward."

At 14:42 hours IST, the stock price was quoting at Rs 355.45, up Rs 4.30, or 1.22 percent on the BSE.
First Published on Jul 12, 2018 02:59 pm
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