Trent, the retail arm of the Tata Group, saw its shares rise to a new 52-week high on August 12 after reporting strong earnings for the quarter ending June 30, 2024.
The company announced a consolidated net profit of Rs 392.6 crore for the first quarter of the current financial year, which is a 126% increase from Rs 173.48 crore in the same quarter last year. Trent’s earnings exceeded market expectations by a large margin.
The revenue from operations for Trent stood at Rs 4,104.4 crore, marking a 56% increase from Rs 2,628.37 crore in the same period last year, according to a regulatory filing.
At 10 am, Trent shares were trading at Rs 6,355 each, up by 1.3% compared to the previous day’s closing price.
Trent reported strong revenue growth thanks to a 51% increase in store area and a 10% growth in sales at existing stores. This growth was driven by Zudio’s impressive performance, which saw a 95% increase in revenue year-on-year, along with Westside’s 20% growth. The company added 18 new Westside stores, 193 Zudio stores, and some other formats, according to Motilal Oswal.
Despite opening many new stores, Trent has managed to keep its balance sheet healthy and has not shown any weakness in operations. The brokerage noted that Trent’s strong revenue growth is mainly due to good sales growth at existing stores, effective expansion, and Zudio’s appealing offerings. They maintained a “buy” rating with a target price of Rs 5,800 per share.
Nuvama Institutional Equities has updated its estimates and set a new price target of Rs 7,136, indicating a potential upside of 14%. They are optimistic about Trent meeting its goals for expanding its Star store footprint.
Morgan Stanley also commented that Trent’s earnings surpassed expectations for both revenue and profits. They maintained their equal-weight rating with a target price of Rs 4,812 per share.
