Trent Limited, a Radhakishan Damani portfolio stock, has surged over 300 per cent in the last five years. The same stock has also delivered a whopping 1,100 per cent return in the last ten years.
Analysts tracking the Tata group company said Trent has been able to deliver consistent outperformance, delivering 18 per cent revenue compounded annually over the last five years, driven by superior business performance in both Westside and Zudio formats.
Domestic brokerage IDBI Capital has upped FY23-24 revenue estimates for this company by 16-17 per cent, to factor in the revised business outlook and store economics. Accordingly, the EPS estimates are upgraded by 8-18 per cent during FY23-24E, the brokerage said in a note.
RK Damani held a 1.5 per cent stake in Trent as of June 30.
The company has a market capitalisation of more than Rs 50,000 crore and the shares are trading above their 100-and 200-day moving averages.
Sharekhan expects Trent’s revenues and PAT to grow at a compounded annual growth rate of 43 per cent and 72 per cent over FY2022-24. Innovation in the product portfolio, scaling up of the supply chain, 100 per cent contribution from own brands, aggressive store expansions and leveraging on digital presence will be key growth drivers in the medium term, the brokerage said in its August report.
ICICI Securities noted that the inherent strength of brands (Westside, Zudio, Star, Zara) and accelerated store additions have led Trent to be among the fastest-growing companies in our retail coverage universe, adding that robust performances during challenging times and an industry-leading performance will continue to warrant premium valuations for Trent.
What do the technical charts suggest? Here’s what experts say:
Osho Krishan, Sr. Analyst – Technical & Derivative Research, Angel One Ltd.
TRENT is primarily in the uptrend and has maintained its cycle of higher highs – higher lows, signifying a secular bull trend. On technical parameters, the stock is hovering well above all its major exponential moving averages on all time frames, adding up to the bullish quotient in the counter.
Also, the stock has witnessed a vertical rally from the 1,000 mark towards the 1,500 mark; hence, some cool-off or correction should not be ruled out in the current scenario. Though the minor correction is to be treated as healthy, any bounce above 1,500 in a decisive manner could trigger another set of the rally in the counter. Hence, looking at the historical movement and price action, the stock has all the potential to not only re-test but even surpass the all-time high zone from a medium to long-term perspective.
Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking Ltd.
The speciality retail sector has outperformed over the past couple of months and outperformed the broader market in the recent correction and subsequent pullback.
Within this space, Trent has been showing resilience within the present consolidative phase and amidst such price action, the stock is at the formation stage of a bullish Triangle pattern.
The stock is well supported by strong volume concentration highlighting larger participation for the past couple of days. Presently, it seems that the stock is trading at the lower panel of the pattern thus offering fresh entry opportunities with favorable risk-reward scenarios.
The said bullish pattern would materialize at the breach of 1,470. Considering the present uncertain situation, it would be wiser to buy on strength i.e. at the breach of 1,470 levels with an upside target initially at 1,565 followed by 1,675.
Manoj Dalmia, Founder and Director, Proficient Equities
Avoid accumulating Trent at current levels as it is facing some resistance. One can expect a retracement level of 1,328. This can be a good level to accumulate. Any closing below 1,238 can trigger further selling.
About the company
Trent was originally incorporated as Lakme on December 5, 1952. The company was then amalgamated with Lakme, and the name of Lakme Limited was changed to Trent.
As part of the Tata Group, Trent’s flagship concept- Westside offers branded fashion apparel, footwear and accessories for women, men and children, along with a range of home furnishings and decor.
Trent also has two separate associations with the Inditex group of Spain with a shareholding of 51 per cent – one entity to operate Zara stores and the other for Massimo Dutti stores in India.
The entities essentially facilitate the distribution of Zara and Massimo Dutti products in India through their respective stores.
