Buy Trent; target of Rs 1600: Motilal Oswal

Motilal Oswal's research report on Trent

Trent continued to deliver stellar revenue growth of 75% YoY, with 23% growth on a LFL basis for Westside. However, instead of passing on high raw material costs to customers, it absorbed them. This, combined with extended EOSS discounting and an increased proportion of the lower GM format Zudio led to a 830bp YoY decline in GM. This aided in inventory clean up. FY23 EBIT margin (on Pre IND-AS 116) improved to 7.7% v/s 7.4%/6.6% in FY22/20.

Outlook

We expect a consolidated revenue/ EBITDA CAGR of 26%/34% over FY23- 25, backed by strong footprint addition and robust LFL growth across segments. We retain our Buy rating with a TP of INR1,600, given the strong growth opportunity for TRENT.