Trent outperforms market for 9th straight calendar year; zooms 127% in 2023

In CY19, Trent Ltd had rallied 46%, followed by 31% surge in CY20, 55% in CY21, and 27% in CY22

Shares of Trent hit a new high of Rs 3,060, up 1 per cent on the BSE in Friday's intraday trade in an otherwise weak market, on expectations of strong earnings. In comparison, the S&P BSE Sensex was down 0.33 per cent at 72,170 at 02:46 PM.

The stock of the Tata group company has zoomed 127 per cent during the current calendar year 2023 as compared to 19 per cent surge in the S&P BSE Sensex. Moreover, this is the ninth consecutive calendar year when Trent has outperformed the market, data shows.

In the previous calendar year 2022 (CY22), the stock price of Trent had appreciated by 27 per cent as against 4.4 per cent gain in the benchmark index. In CY19, the stock had rallied 46 per cent, followed by 31 per cent in CY20, and 55 per cent in CY21. In comparison, the S&P BSE Sensex gained in the range of 14 per cent to 22 per cent during the period. Refer table below

Trent is part of the Tata Group and operates a portfolio of retail concepts. The primary customer propositions of Trent include Westside, one of India's leading chains of fashion retail stores, Zudio, a one stop destination for great fashion at great value, and Trent Hypermarket, which operates in the competitive food, grocery and daily needs segment under the Star banner.

Trent's new fashion concepts include Samoh, a differentiated and elevated occasion wear offering and Misbu that offers a curated and compelling range of beauty, personal care and fashion accessories.

For Q2FY24, the company had reported a strong 55.6 per cent year-on-year (YoY) jump in its standalone net profit to Rs 289.70 crore driven by robust revenue growth, which was led by aggressive store additions in Zudio and 10 per cent like-for-like (LFL) growth. It had posted a profit of Rs 185.90 crore in the year ago quarter.

Revenue, meanwhile, grew 59 per cent YoY to Rs 3,063 crore in Q2. The company's profit before tax rose 54 per cent YoY to Rs 375 crore as against Rs 243 crore in Q2FY23. Earnings before interest, taxes, depreciation, and amortization (Ebitda) margin came at 15.9 per cent, and saw an expansion of 120 bps YoY for the reporting quarter.

Trent’s industry-leading revenue growth was driven by healthy SSSG (same-store sales growth) and productivity, robust footprint additions, and a healthy scale-up opportunity in Zudio offers a huge runway for growth over the next three to five years, according to Motilal Oswal Financial Services (MOFSL).

The company’s grocery segment, Star, with a presence of merely 65 stores and annualized revenue of Rs 1,810 crore (FY23) presents a huge opportunity to support growth. Its own brand strategy and curated range are seeing strong customer reception, the brokerage firm said in its management meet update. MOFSL maintains BUY rating on the stock with a target price of Rs 3,140 per share.

Analysts at Axis Securities, on the other hand, believe Trent’s outstanding performance, despite weak consumer demand, is commendable. The brokerage firm further expects strong sales growth to continue in the coming quarters as Trent focuses on rapid store expansion and continued assortment renewal, which will result in higher overall footfall.

"In addition, the improvement in the earnings profile across all formats, the reduction in losses at Star Bazaar and the improvement in traction at Inditex JV are also positive signs for the company. In recent years, the company has followed the small-format store model in Star Food. This, combined with sharp pricing and a focus on fresh produce and private labels has led to positive results. This model is resilient and demonstrates strong commercial viability," analysts said in their result update report.

Calendar	Returns in %
Year	Trent	Sensex
2015	13.2	-5.0
2016	19.3	1.9
2017	67.6	27.9
2018	7.3	5.9
2019	45.8	14.4
2020	30.5	15.8
2021	54.8	22.0
2022	26.8	4.4
2023	126.6	18.8