Buy Trent; target Rs 1083: Firstcall Research
Brokerage house Firstcall Research is bullish on Trent and has recommended buy rating on the stock with a target price of Rs 1083 in its August 06, 2013 research report.
August 07, 2013 / 12:34 IST
Firstcall's research report on Trent
"Trent, Westside lifestyle chain the famous retail chain of Tata group has improved its sales and profit figures over the previous year in June 2013. The sales revenue of the company has increased by about 15 percent, which is good enough in the present economic scenario. The margins of company improved as the input cost stabilized over the year and it also controlled its expenditure on advertising and promotion. The sales of the company have increased by 10 percent and the EBDITA is constant at Rs. 294.20 mn in Q1 FY14 quarter over the previous quarter. The net profit of Trent on standalone basis has reduced in June quarter over the previous quarter by 11 percent. Although the yearly results have shown resilience, the quarterly results are showing signs of deterioration of macroeconomic environment in the country.""The company has no short term borrowings and the long term borrowings are constant at Rs.2250 mn. Thus the company has low debt equity ratio of about 0.15 which is phenomenal in the present scenario. Trent has also opened new seven stores in the 2012-13. In addition to that four more stores have opened in the 1st quarter of the current financial year. The company is expanding at a fast face without raising its debt and has a loyal customer following. The target customer market of Westside is the middleclass and the upper middleclass and thus in case the economic scenario changes with improvement in the investment climate, low inflation rate and high disposable income, the sales of the company are bound to increase. The organized structure of the multibrand apparel industry is only 15 percent and Westside with its high quality differentiated products comes among the top three players. Thus we recommend BUY for the scrip."Outlook and Conclusion: "At the current market price of Rs.998.00, the stock P/E ratio is at 46.55 x FY14E and 41.28 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.21.44 and Rs.24.18 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 14 percent and 19 percent over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 29.18 x for FY14E and 26.51 x for FY15E. Price to Book Value of the stock is expected to be at 2.07 x and 1.97 x respectively for FY14E and FY15E. We expect that the company's financials to improve in coming quarters and take its growth story forward. We recommend 'BUY' in this particular scrip with a target price of Rs 1083 for Medium to Long term investment," says Firstcall Research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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