Hold Trent; target of Rs 4200: ICICI Securities

ICICI Securities research report on Trent

Back-to-back 10% SSSG since last three quarters is impressive (significant outperformance vs peers). Retail expansion has been in line with expectations (added 203 Zudio stores and 30 Westside in FY24). Zudio is now 53% (retail area) contribution and is expected to reach 60% by adding 400+ stores during FY25-26E. We believe Zudio has a clear path to scale up to ~2,000 stores over next ~7 years. Overall productivity (revenue psf) has improved by 4% YoY to INR 15k psf (led by Zudio’s outperformance). The only negative in the result was higher store closure in Westside (7 stores in 4Q; 12 in FY24); ~5% mortality rate. However, it’s still in healthy range. Margins remain healthy while ROICs improve due to capital light expansion in Zudio. Exceptional gains due to lease assets/liabilities re-assessment is transitory. At current valuation, we maintain HOLD.

Outlook

We increase our EPS estimates for FY25E-FY26E by ~5%, incorporating better-thanexpected store throughput. We model revenue, EBITDA and PAT CAGRs of 30%, 32% and 37%, respectively, over FY24-FY26E. We maintain HOLD with a revised DCFbased target price of INR 4,200 (from INR 3,500).

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