Trent’s shares are in focus as the company reported its quarterly numbers for Q3FY26. Nuvama Institutional Equities has slashed the target price on the stock. Trent was among the earliest entrants in the organised retail sector in India, and Nuvama believes that the company’s business should be separately valued. Motilal Oswal, however, is optimistic about the medium-term trend and sees 30% upside from current levels.
Why are the brokerages divided on the stock? Here is a detailed analysis of the investment rationale.
Motilal Oswal on Trent: Medium-term outlook positive
Motilal Oswal has reiterated ‘Buy’ on Trent and kept the target price unchanged at Rs 5,200 per share. This implies nearly 30% upside from current levels.
The brokerage house pointed out that “strong cost discipline, especially RFID-led manpower optimisation and variable cost structure, drove 90 bps expansion. That said, Trent’s growth rate has decelerated materially over the last few quarters due to weak like-for-like sales amid a subdued demand environment and self-cannibalisation of existing stores to gather higher revenue in select micro-markets
The management indicated that consumer sentiment remained muted in Q3FY26, though the trends are gradually improving, and the medium-term outlook remains positive.
Though the standalone margins expanded 23%, Trent’s like-for-like growth for the fashion portfolio was marginally negative in Q3FY26, due to a festive shift. The other key factor wat watch was that despite 39% YoY net store additions, employee costs grew by a modest 3% YoY, while SG&A and other costs rose 11% YoY.
Motilal Oswal, however, believes that Trent continues to “display strong cost controls (especially tech-led reduction in employee costs) to report healthy EBITDA growth. We continue to like Trent for its robust footprint additions, retail formats with robust store economics.”
On the Star Bazaar business, they predict a “long runway for growth in Star (presence in just 11 cities), and potential scale-up of emerging categories (Beauty, Innerwear and Footwear).”
However, revenue growth acceleration remains a key trigger, they added.
Nuvama on Trent: Need to value different formats separately
Nuvama Institutional Equities cut the target price on Trent to Rs 4,543 from Rs 5,189, implying an upside of 13.2%. The brokerage house maintained its ‘Hold’ rating. The company’s operating deleverage due to negative LFL (Like for Like sales) during Q3 was offset by gross margin improvement (+29 basis points), possibly due to a favourable mix in favour of Westside and lower employee cost (-73 bps).
Trent delivered a standalone revenue growth of 16% YoY, EBITDA growth of 28%, and adjusted net profit growth of 19% YoY in Q3 FY26. The company’s management did indicate that all the benefits of automation are now realised, implying productivity-led margin improvement going ahead, which has been under pressure over the past year. Rent (fixed & variable) growth at 17% YoY was in line with revenue growth.
“We are prioritising the operating EBITDA margin (reported at 15.2%, up 90 bps) to bypass the difficulty in interpreting pre-IndAS leases. Improvement in Operating EBITDA margin was driven by improvement in gross margins (29 bps) and lower employee cost (-73 bps) due to automations and RFID implementation,” said the brokerage house.
Trent share performance
The share price of Trent has given a return of 5% in the last five trading sessions. The stock has declined 9.4% in the last one month and more than 24% in the past six months. Trent’s stock price has erased 30% of investors’ wealth in the previous 12 months.
Trent Q3FY26
Trent reported an increase of 36% year-over-year in its standalone net profit to Rs 640 crore in Q3FY26. The company had recorded a net profit of Rs 469 crore in the same quarter a year ago. The company’s net profit was impacted by a one-time charge of Rs 26.11 crore related to the implementation of new labour laws in India.
Its revenue from operations rose 16% YoY in Q3FY26 to Rs 5,259 crore, compared to Rs 4,535 crore in the corresponding quarter a year back.