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Last Updated : May 17, 2018 04:57 PM IST | Source: Moneycontrol.com

Buy Trent; target of Rs 380: ICICI Direct

ICICI Direct is bullish on Trent has recommended buy rating on the stock with a target price of Rs 380 in its research report dated May 08, 2018.

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ICICI Direct's research report on Trent


Revenues for the quarter grew 18% YoY to  Rs 528.7 crore vs. our estimate of  Rs 540.4 crore. Results for the quarter include revenues from Zudio, which was acquired by the company with effect from October 1, 2017. For FY18, revenues of the Westside format grew robustly by 20% YoY with like to like (LTL) sales growth of 9% Gross margins improved 92 bps YoY to 50.3% while controlled operating expenses accelerated the improvement in EBITDA margins, which expanded 160 bps YoY to 4.7% (I-direct estimate: 4.6%). Subsequently, absolute EBITDA grew 78% YoY to  Rs 24.9 crore (I-direct estimate:  Rs 24.9 crore) PAT for the quarter came in at  Rs 11.7 crore (I-direct estimate:  Rs 11.4 crore) vs.  Rs 25.3 crore in Q4FY17. The de-growth was mainly owing to absence of exceptional income ( Rs 24.7 crore) and higher tax incidence (30% of PBT in Q4FY18 as compared 12% in Q4FY17)


Outlook


Westside continues to be one of the most successful, established franchises in the women’s wear category. A 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%, with RoCE increasing 260 bps YoY to 10%. We factor in margin expansion of 120 bps to 10.5% by FY20E. THL’s strategic focus on mid-sized stores would lead to cost synergies, thereby reducing losses at the PAT level. We reiterate our BUY rating on the stock with a revised target price of  Rs 380.


For all recommendations report, click here


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First Published on May 17, 2018 04:57 pm
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