Shares of Tata Group’s retail arm Trent rose over 8% today after the firm announced its earnings for Q3. Trent shares rose 8.7% to Rs 1343.25 against the previous close of Rs 1235.70 on BSE. Trent stock is trading higher than the 5 day, 20 day, 50 day and 200 day moving averages but lower than 100 day moving averages.
The stock has gained 25.77% in one year and lost 0.5% since the beginning of this year. Total 1.44 lakh shares of the firm changed hands amounting to a turnover of Rs 18.88 crore on BSE.
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Market cap of the firm rose to Rs 47,670 crore.
The stock hit a 52-week high of Rs 1,571 on November 2, 2022 and a 52-week low of Rs 983.70 on May 12, 2022 . Later, the Trent stock ended 8.64% higher at Rs 1342.45 on BSE.
The Tata group company reported a 21 per cent year-on-year rise in net profit to Rs 161 crore for the quarter ended December 2022 compared with Rs 132.89 profit in the corresponding period a year ago. The company’s revenue increased 61 per cent to Rs 2171 crore for the three-month period against Rs 1347.76 crore in the corresponding period of the previous fiscal.
But standalone EBITDA grew only 15% (19% miss), dragged down by lower gross margins due to a higher share of low-margin Zudio, the inventory provision reversal in the corresponding quarter and discounting.
Motilal Oswal has assigned a target price of Rs 1500, 21% above the current market price of Rs 1236 post Q3 earnings.
“We cut our FY23/24 EBITDA estimates by 7%/4%, factoring in a standalone revenue/EBITDA CAGR of 28%/30% over FY23-25, led by a strong 21% footprint addition and healthy SSSG. We expect a standalone revenue/EBITDA CAGR of 28%/30% over FY23-25, backed by a strong footprint addition and robust LFL growth across segments. We retain our Buy rating with a target price of Rs 1,500, given the strong growth opportunity,” said the brokerage.
HDFC Securities has maintained a sell call on the Trent stock with a target price of Rs 1040 per share.
“Trent continued its stellar topline growth. Standalone revenue grew 36% CAGR (three-year) to Rs 21.7 billion. We suspect while Westside’s growth remains handsome (HSIE: 3-yr CAGR 15%), Zudio’s blitz scaling continues to be the big needle-mover. The F&G format Star is finding its bearings too and improving its value proposition/sales density. However, with aggressive expansion comes costs. Hence, profitability disappointed. PBTM came in at 9.6% (HSIE: 12%) due to front-loading of Zudio-related costs. We’ve largely kept our FY24/25 EBITDA estimates steady and maintained SELL, with a SOTP-based TP of Rs 1,040/share, ” said HDFC Securities.
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