Trent, A renowned Tata group company, has become the top gainer of nifty 50 this year. The stock has rallied over 130%+ this year and 400%+ in the last two years, But what is next? Will the growth continue? Let us try to find the answer through Trent’s fundamental analysis.
Trent Company Overview
Trent Limited is one of India’s leading retail companies, part of the Tata Group, known for its dynamic approach to modern retailing. Established in 1998, the company operates a diverse portfolio of retail formats, including Westside, Zudio, and Star Bazaar, fashion to a wide range of consumer needs.
Key-takeaways
- Trent’s stock has surged over 130% in the past year and an incredible 400% over the last two years.
- Trent has plans to launch 150-200 new Zudio stores and 30-40 Westside stores in FY25.
- Trent has demonstrated exceptional financial performance, with a 68% revenue CAGR and a 101% profit CAGR over the last three years.
- Profit margins and return ratios have shown significant improvement in FY24.
- Despite strong fundamentals, Q2 FY25 results missed market estimates, leading to a 20% drop in stock price.
Trent stores growth
The company’s sales growth has primarily been driven by the performance of its Zudio and Westside stores. With this momentum in mind, let’s take a closer look at the company’s plans for launching new stores in FY25.
| Brands | Stores FY24 | New Stores Launch Expectations |
|---|---|---|
| Zudio | 577 | 150-200 |
| Westside | 226 | 30-40 |
The consistent expansion of stores is expected to drive significant revenue growth for the company in the coming years. Now, let’s explore how was the sales growth in past few quarters.
Annual Trent Fundamentals
This TATA Group company, with its aggressive expansion has grew their sales exceptionally. On an average, the company had 68% growth in their sales in the last 3 years. the below chart will help to understand the growth better.
Sales Growth
Profit Growth
Notes:
In the last 3 years, Trent has shown average sales of 68%.
In FY24, the retail store company had a slowdown in its sales growth compared to previous years.
Based on 13 analysts, the sales are likely to grow by 44% in the current FY25. (source)
Notes:
In 2022, The company came back to profit after the loss in 2021 due to the lockdown.
In FY24, Trent, the Tata company, Posted their highest ever profit of Rs.1,477
The 3 year Profit CAGR of the company is standing at 101%.
Cash Flow Statement
| Particular | FY22 | FY23 | FY24 |
|---|---|---|---|
| Operating Activities | 58 | 595 | 1,349 |
| Investing Activities | 56 | -103 | -508 |
| Financing Activities | -108 | -491 | -629 |
| Net Cash Flow | 6 | 1 | 211 |
The company’s growing operating activities and robust net cash flow indicate a solid financial health and stability foundation, reflecting its ability to efficiently manage operations and generate consistent cash reserves.
Profit Margins and Ratios
Despite lower revenue growth in FY24, The company’s margins were higher than last year’s. Gross profit margin stood at 17.86% while operating profit margin at 12.44%. On the other hand, the Net profit Margin stood at 10.94%.
| Particular | FY22 | FY23 | FY24 |
|---|---|---|---|
| Gross Profit Margin (%) | 16.65 | 16.19 | 17.86 |
| Operating Profit Margin (%) | 9.74 | 10.20 | 12.44 |
| Net Profit Margin (%) | 0.65 | 3.76 | 10.94 |
| RoE (%) | 4.47 | 17.13 | 36.55 |
| RoCE (%) | 6.19 | 12.03 | 27.40 |
| RoA (%) | 1.36 | 5.50 | 20.76 |
| Debt/Equity (x) | 0.21 | 0.19 | 0.12 |
| Interest Coverage Ratio (x) | 2.46 | 3.61 | 6.93 |
The company’s return ratios have shown notable improvement, with RoE rising from 4.47% in FY22 to 36.55% in FY24 and RoCE increasing from 6.19% to 27.40% during the same period. Similarly, RoA grew significantly from 1.36% to 20.76%, reflecting better asset utilization.
Debt management has also strengthened, as the Debt-to-Equity ratio dropped from 0.21 in FY22 to 0.12 in FY24. Additionally, the Interest Coverage Ratio improved to 6.93x in FY24, highlighting the company’s strong financial position and ability to manage obligations effectively.
FY25 Quarterly Trent Fundamentals
From fashion retail stores to groceries, Trent has performed exceptionally well over the years. But how did the company perform in recent times? The table below will give us an answer to the question.
| Q1FY25 | YoY % Change | Q2FY25 | YoY % Change | |
|---|---|---|---|---|
| Revenue | 4,104 | 56% | 4,157 | 39% |
| EBIDTA | 612 | 67% | 643 | 41% |
| Profit | 391 | 134% | 335 | 47% |
During FY25, Trent Limited has maintained its momentum, driven by aggressive expansion and a focus on growth. This progress is evident in its recent quarterly performance. In Q1, revenue surged by over 50%, continuing the strong trajectory seen in previous quarters. However, Q2 showed a slight slowdown, with revenue growth at 39%—the lowest in the past four quarters.
Related: What is Revenue from Operations?
On the profitability front, Q1 profit soared by 134% year-over-year, showcasing exceptional performance. In Q2, while profit growth stood at 47%, it fell short of expectations, reflecting a more subdued quarter compared to the company’s recent achievements.
Shareholding Pattern
Notes:
The Promoter has been holding 37.01% since March 2020.
FIIs have increased their holding to 26.6% from 24.43% since March 2023.
Trent Stock Performance
Over the years, Trent has delivered remarkable returns to its investors, gaining over 400% since January 2023 and more than 130% since January 2024. However, recently the stock faced a correction of over 20% from its all-time high, primarily due to missed Q2 earnings estimates. As the stock shows signs of recovery, let’s take a closer look at the impressive returns it has offered to investors over time.
Stock Returns
| Period | Returns |
|---|---|
| 1 Week | 4.20% |
| 1 Month | 3.99% |
| 3 Months | -9.13% |
| YTD | 128.05% |
| 1 Year | 133% |
| 3 Year CAGR | 90% |
Current Stock Details and Valuation
| Particular | Value |
|---|---|
| CMP | 7,118 Rs |
| Market Cap | Rs 2,53,047 Cr |
| 52-Week High | 8,346 Rs |
| 52-Week Low | 2,941 Rs |
| Stock P/E | 186 |
| P/B | 62.21 |
Well, the stock is trading at a higher valuation. However, We cannot deny that the stock price is moving with the company’s amazing growth. At the current state, the Trent stock’s P/E is at 186 while the P/B value is at 62.21.
As of December 27, The stock is trading at a market cap of over 2,50,000 Crore and a price of 7,118. Which is over 1000Rs Below its 52-week High of Rs 8,346. But, are there possibilities of the stock coming back to its all-time high? Let us take a look at what research firms have to say about it.
Trent Stock Target 2025
The recent fall in stock cannot outrule that the Trent Fundamentals are strong. Additionally, The Research firms, are giving buy calls despite missing the estimates of Q2 Results. In early November, Motilal Oswal and Sharekhan gave the share price targets of Rs 8,200 and 8,261. Now we wait to see if stock will come back to its all-time high.
Conclusion
Trent’s impressive growth over the past two years, coupled with strong fundamentals and aggressive expansion plans, positions it as a standout performer in the retail sector. While recent stock corrections raise questions, the company’s robust financial health, consistent profit growth, and strategic store expansion provide a solid foundation for future success. As the market evolves, Trent’s ability to sustain its momentum will be key in determining whether it can reclaim its all-time highs and continue delivering exceptional returns for investors.
Sources
Disclaimer: This article is only published for educational purposes only. The views/Targets on the stock price are of analysts and not anyone from Stock Inisideout. The stock insideout never gives any recommendation or suggestions regarding any stock or market. We are not SEBI registered and We will not be responsible for your capital. We would like you to consult your financial advisor before investing.
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