The brokerage said it liked Trent’s ability to conceptualize and scale new formats on short notice. It also forecasts a healthy revenue/EBITDA/PAT CAGR of 28/29/32% for the period 2023-25E. However, the stock’s rich valuation results in a downgraded rating and a fair value based on SoTP of Rs 1,320.
Trent is a leading fashion retailer selling 100% local brands across clothing, lingerie, accessories and footwear categories. The company is best known for its flagship Westside format (59.5% of FY 2023E revenue) but has also rapidly scaled up the Zudio format (39.9% of FY 2023E revenue) ).
“Our standalone business DCF line achieves a steady compound annual growth rate (CAGR) of revenue for 2022-60E of 13%, EBIT margins gradually increasing to 12%. and WACC of 12.1%, translating to a December 2024 P/E of 60x Consumer spending and losses slowing market share for other brands/formats are the main risks to the model. Trent’s picture,” it said.
However, the brokerage further claims that increased spending on branded apparel and geographical expansion of stores will be the main growth drivers.
“We believe Trent’s business model is scalable. Zudio’s massive growth in store numbers, with RoACE similar to Westside’s core format, gives us confidence that Trent has the right platform in place,” he said. covers a variety of functions such as real estate acquisition, store management, and We believe the premiums are reasonable, given the outstanding growth trajectory of Trent and the larger TAM, the broker said. .
Shares of Trent fell about 3% to Rs 1,240.5 in Friday trading. Shares have fallen about 15% last month and are down 7% year-to-date.
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