Brokerage firm Bernstein has an ‘Outperform’ rating on Trent, with a price target of ₹6,500.
However, the brokerage highlighted a significant disappointment in revenue growth. Standalone revenue growth came in at 20% for Q1FY26, sharply lower than 57% in Q1FY25.
This indicates a significant reduction in revenue per square foot. Given the company’s commentary of low single-digit like-for-like (LFL) growth, it also suggests a muted ramp-up in revenues from new stores.
Trent added 27% more stores between Q1FY25 and Q1FY26. Due to the addition of larger-format stores, total retail space (SQFT) rose by 38% during the same period.
Citi has a ‘Buy’ rating on Trent but has cut its price target to ₹7,150 per share.
While revenue growth slowed to 20% YoY (36% CAGR vs pre-COVID levels), it is still ahead of other discretionary players, the brokerage said.
LFL growth moderated to low single digits, compared to mid-single digits in Q4FY25. However, profitability surprised positively, with EBITDA and PAT rising 37% and 24% YoY, respectively, likely aided by the reversal of inventory provisioning and lower employee costs due to the impact of long-term incentives in the base quarter.
Store expansion remained muted, with no net additions for Westside and just one for Zudio, continuing the trend typically seen in Q1.
Management highlighted that the gross margin profile of both Westside and Zudio remains consistent. They reiterated their focus on driving overall revenue growth rather than just LFL improvement.
Additionally, the company is expanding its footprint in tier-2 and tier-3 cities, and hence, revenue and growth trajectories may not be directly comparable with those in metro markets.
Nuvama Institutional Equities has maintained a ‘Hold’ rating, with a revised price target of ₹5,850 from ₹5,884 earlier.
The brokerage said that Trent delivered a strong margin improvement in Q1FY26 despite lower productivity. This was mainly due to a 331 basis points reduction in retailing costs, partially offset by a 108 bp fall in gross margin.
Margins benefited from technology and automation, enabling fewer employees per store and from lower rents driven by reduced throughput. Management reiterate focus on revenue growth across micro markets implying pressure on LFL may continue.
Of the 25 analysts that have coverage on Trent, 15 of them have a ‘Buy’ rating, while five each have a ‘Hold’ and a ‘Sell’ recommendation on the stock.
Trent shares settled 1.3% higher on Wednesday at ₹5,320. The stock is down 3% in the last one month and 25% on a year-to-date basis.
