Motilal Oswal's research report on Trent
Trent's aggressive footprint expansion and strong LTL growth of 16% YoY translated into a robust 53% YoY revenue growth; however, the back- ended store additions increased the costs disproportionately thereby reducing EBITDA growth to a mere 12% YoY. Westside and Zudio's store-level economics remains healthy as evident from: a) the strong LTL growth, b) Westside's annualized revenue run-rate which was almost double its FY22 level ( >INR50b) and c) our channel checks. We expect revenue/EBITDA growth of 45%/58% over FY22-24, respectively, on continued aggressive store additions and healthy LTL growth. We retain our BUY rating given Trent's strong growth opportunity.
Outlook
We have ascribed 31x EV/EBITDA to the standalone business (Westside and Zudio; 15% premium over the last five years until pre-Covid and 10% premium over our retail coverage universe given its superlative growth), 1x EV/Sales to Star Bazaar and 15x EV/EBITDA to Zara on FY24E, thereby arriving at our TP of INR1,430. Maintain BUY.
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