Trent stock price jumped over 4 percent in the morning trade on February 9, a day after the Tata group retail firm reported a consolidated net profit of Rs 154.81 crore in the December quarter, up from Rs 113 crore in the year-ago period.
Its revenue from operations was at Rs 2,303.38 crore against Rs 1,499.08 crore in the third quarter of FY22. Trent's total expenses were at Rs 2,189.62 crore, the company said in a regulatory filing.
At 9.52 am, Trent, which operates Westside fashion chain and Landmark bookstores, was quoting at Rs 1,291.45, up Rs 55.75, or 4.51 percent on BSE. The scrip was trading with volumes of 38,585 shares, compared to its five-day average of 21,201 shares, an increase of 81.99 percent.
Westside reported a growth of 17 percent in same-store sales. It operates 211 Westside stores, 326 Zudio stores and 21 stores across other lifestyle concepts.
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Riding high on Westside
Global research and broking firm Jefferies has a “hold” rating on the stock with the target at Rs 1,400 a share, an upside of 8 percent from the current market price. The company continues to see good momentum, with Westside reporting a 17 percent like-for-like (LFL) growth.
Overall growth was ahead of estimates, while there was a miss in the margin at gross and EBITDA level but overall earnings were ahead of estimates, the brokerage firm said.
"We find Trent a strong play on apparel opportunity, while on the other hand, concerns persist on the urban slowdown and valuations," it added.
According to domestic research and broking firm Sharekhan, Trent reported mixed third-quarter earnings. It has a “buy” rating on the stock, with the target at Rs 1,550, an upside of 20 percent from the current market price.
Trent delivered yet another quarter of industry outperformance in Q3 FY2023, with over 60 percent revenue growth, while EBIDTA margin fell 619 basis points (bps) YoY to 15.5 percent on normalisation of fixed cost. Its profit after tax grew 21 percent YoY, led by strong revenue growth.
One basis point is one-hundredth of a percentage point.
"Westside’s like-for-like growth stood at 17 percent; contribution of emerging categories increased to 18 percent in Q3 FY2023 from 15 percent in Q2 FY2023,” it said.
With encouraging performance from new stores opened in the past 12 months and strong like-for-like growth in Westside, revenue is expected to grow in double digits ahead of peers in the coming quarters, it added.
The stock has corrected by 20 percent from its high and is trading at attractive valuations of 28x/22x/18x its FY 2023E/FY 2024E/FY 2025E EV/EBIDTA, it said.
With agency inputs
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