Nuvama Institutional Equities has maintained its Buy call on Trent. The brokerage firm raised the target price slightly to Rs 6,627 from Rs 6,224. This implies upside of almost 16%. The upgrade in price target came after the analysts said that Trent’s management provided valuable insights into their growth strategies and KPIs, notably emphasising city market share over like-for-like (LFL) growth.
Nuvama on Trent: Quality takes priority in Star initiative
They also highlighted the critical role of hygiene and quality in the Star initiative as central to driving store traffic via its fresh offerings. Regarding Star’s retail initiative, management said building scale in this segment would be a long-term process, potentially spanning decades. All company-owned brands, including Star, are positioned to be tech-integrated at the back end.
However, the Tata Group’s retail and fashion arm missed store addition targets in the Star format as the management emphasised caution over chasing numeric milestones.
Nuvama on Trent: Zudio appears to be primary growth engine
Zudio appears to be the primary growth engine, said Nuvama. The financial viability of smaller store concepts—Samoh and Zudio Beauty—has not been conclusively proven yet to warrant aggressive expansion. Samoh and Zudio Beauty are not loss-making, but management acknowledged these formats have yet to prove their relevance. Thereafter, Trent’s management will focus on blitzscaling.
Nuvama on Trent: Business model remains same with Trent owning control
Trent reaffirmed the long-term focus on India and emphasised their preference for categories that generate repeat purchases. The categories with low purchase frequency, such as dining tables, are not of interest. The franchisee model is essentially structured as a property model, with the company retaining control over the customer proposition and no inventory being sold to franchise partners. Also, the owned-brand strategy remains central to the business model, with no interest in distributing third-party brands.
“We remain optimistic on the business outlook and hence adjust up our revenue estimate for FY27 by 0.4% and trim net profit by 4%,” said Nuvama.
Trent stock performance
The share price of Trent has risen by over 3% in the past one month. However, it has fallen by over 19% in the last six months.