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The stock has performed exceptionally over the past five years, generating returns of around 35 per cent per annum. Some brokerage firms are seeing further gains of up to 36 per cent on Trent. This is despite some concerns about slowdown in demand in the near term in tier 2-3 cities.
Radhakishan Damani, through his investment arm Derive Trading & Resorts, held 1.52 per cent stake in the retailer as of March 31. Akash Prakash-led Amansa Holdings also held a 2.26 per cent stake in the Tata group firm.
Trent generates 72 percent of its revenue from Westside and the rest from Zoodio. It also operates the food and grocery format Star Bazaar and fashion brand Zara in India through a joint venture.
“Strong performance during challenging times and industry-leading performance will continue to drive premium valuations for Trent. We maintain our buy rating on the stock,” ICICIDirect said in a note. This brokerage has set a target of Rs 1,470 on the stock.
Key triggers for the stock’s rally include growth in stores, strong performance in Judio and strong liquidity positions.
The company added 125 stores at Westside and Zoodio in fiscal 2012, bringing the total number to 435 stores in fiscal 2012, exceeding management guidance of 425 stores.
Axis Securities in a recent note expects Trent to continue with its expansion drive, intending to build 135 stores each in FY23 and FY24 to capitalize on the strong demand outlook.
ICICIDirect said it expects to add 215 stores between Westside and Judio for FY23-24.
“Liquidity position remains strong with cash and investments of over Rs 600 crores which will enable it to better tide over the current situation. Zoodio continues to be the growth engine for Trent. We expect its revenues to reach 48k crores. Will grow at a CAGR of 22-24 per cent in FY22-24. In the long run, the company aims to grow its revenues at a CAGR of over 25 per cent,” ICICIDirect said.
penciling in 37 percent revenue growth during fiscal 2012-24 that it thinks a premium valuation for the stock is necessary.
In the highlights of the annual report, analysts noted that Zoodio continues to be the fastest growing value fashion brand in India, with revenues of over Rs 1,000 crore in FY12. With the scale of brand acquisition, the EBIT margin increased to 6 per cent in FY12 from around 1 per cent in FY11.
In the case of Westside, sales surpassed pre-Covid levels with positive Same Store Sales Growth (SSSG) from H2FY22. The FY22 gross revenue for this format stood at Rs 2,900 crore.
Analysts said Zara India posted a strong peak growth of 61 per cent, which was 115 per cent of pre-Covid levels, despite muted store additions. That said, losses for Star Bazaar increased year-on-year, mainly due to higher discounts and faster pricing.
Motilal Oswal said that despite the adverse impact of the pandemic, Zoodio’s revenue in FY12 more than doubled from FY12 levels. It should grow 3 times to Rs 3,300 crore in the next two years.
“Checking out our channel shows that six months old Zoodio stores are achieving an annual revenue run-rate of Rs 10 crore, i.e. Rs 14-15k per sq ft, about 20-30 per cent as compared to similar sized stores More. We understand that the company is aggressively vying for 200 store additions in FY23E. In addition, Utsa which caters to women’s ethnic wear, now has six stores and another growth driver for the company It is made,” said Motilal.
The brokerage has revised FY24 EV/Ebitda valuation to 31x that of standalone business (Westside and Judio), 1x EV/sales valuation of Star Bazaar, and 15x EV/Ebitda valuation of Zara to reach the revised target of Rs. held responsible for. 1,430 from earlier Rs 1,180.
Philips Capital sees the share at Rs 1,379. Axis Securities has an over the counter target of Rs 1,180.
On Friday, the stock was trading at Rs 1,063.80 per piece and the target is indicating a rise of 9-36 per cent.
(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)
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