Buy Trent; target of Rs 2070: Motilal Oswal

Motilal Oswal's research report on Trent

TRENT continued to deliver stellar revenue growth of 54% YoY (in line) in 1QFY24, with 12% growth on LFL basis for Westside. However, with a high mix of Zudio (lower GM segment) and aggressive store adds, gross/EBITDA margin contracted 480bp/ 400bp, leading to a 24% EBITDA miss. We largely maintain our EBITDA estimates, building in a 38% CAGR in consolidated revenue/EBITDA over FY23-25, backed by strong footprint addition and robust LFL growth across segments. Star’s improving store metrics offer a further opportunity.

Outlook

We retain our BUY rating with a TP of INR2,070, given the strong growth opportunity for TRENT.