Shares of Trent Ltd, a prominent retail player in the Tata Group, surged to an all-time high during early trading on Thursday after global brokerage Citi began covering the stock with a 'buy' recommendation. Citi has set a price target of ₹9,250 for Trent, suggesting a potential upside of 21% from its previous closing price. This stock has also been included in Citi’s Pan-Asia high-conviction focus list, reflecting strong investor confidence.
Impressive share market investment performance
Over the past two years, Trent's shares have skyrocketed by an astonishing 463%, while the past year alone has seen a remarkable gain of 269%. In a three-year window, the stock has delivered an impressive 702% return to its investors, underscoring the efficacy of share market investment in high-performing stocks like Trent.
Strong fundamentals and business transformation
Citi attributes Trent’s success to its effective utilisation of supply chain capabilities and insights from its Westside and Zudio brands, which have notably improved the performance of its Star Bazaar business. The brokerage believes that Trent is in a prime position to expand its pilot projects, including MISBU, Samoh, and its joint venture with MAS.
Trent's transformation from a single-format player to a multi-format retailer has led to a compound annual growth rate (CAGR) of 36% in revenue from FY19 to FY24. As a multi-category entity covering fashion, lifestyle, groceries, and personal care, Trent has achieved remarkable revenue, EBITDA, and profit after tax CAGRs of 41%, 44%, and 56%, respectively, for FY24 to FY27.
Current market dynamics
On Thursday, shares of Trent rose by 4.32%, reaching a record high of ₹7,939. However, technical indicators suggest that the stock is currently overbought, with a relative strength index (RSI) of 77.4. The stock is also trading significantly above its moving averages across various timeframes, indicating a strong bullish trend.
Trading activity reflected a turnover of ₹14.75 crore, with 0.19 lakh shares changing hands on the BSE, while the company's market capitalisation stood at ₹2.78 lakh crore. Notably, Trent's shares touched a 52-week low of ₹1,946.5 on October 26, 2023.
Financial performance highlights
Trent reported an impressive 225% increase in consolidated net profit for the June quarter, climbing to ₹391 crore compared to ₹167 crore in the same quarter last year. Revenues also surged by 56% to ₹4,104 crore, up from ₹2,628 crore in the corresponding period a year prior. EBITDA skyrocketed by 199% year-on-year, reaching ₹400 crore, up from ₹266 crore in the previous year.
As a member of the Tata Group, Trent Limited operates multiple retail concepts, including Westside, Zudio, and Star, catering to diverse consumer needs.
Key takeaways
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