While the company delivered a strong operational performance during the quarter, management flagged near-term challenges stemming from geopolitical uncertainties. Trent said disruptions in the Middle East could impact supply chains, commodity prices and inflation, potentially affecting demand in the coming quarters.
The company also said that consumers continue to balance aspirations with financial discipline, resulting in measured discretionary spending.
For Q1FY27, like-for-like (LFL) growth in Trent’s fashion portfolio remained in the low single digits. Management said it has not witnessed any material increase in competitive intensity in recent quarters, while its Star food and grocery business continues to see encouraging consumer traction.
Looking ahead, Trent expects its next phase of growth to be driven by expansion into Tier-II and Tier-III cities, although it said stores in newer markets typically take two to three years to mature.
Brokerage views
HSBC maintained its ‘Buy’ rating with a target price of ₹3,390. The brokerage said EBITDA exceeded its estimates by around 10%, driven by stronger gross margins, likely reflecting the lagged benefit of lower raw material costs.
While fashion LFL growth remained in the low single digits, HSBC said management commentary was marginally more positive than in the previous quarter. It added that an acceleration in revenue growth remains the key trigger for further stock outperformance.
Jefferies retained its ‘Hold’ rating with a target price of ₹3,435. It said Trent delivered strong earnings growth, supported by margin expansion and aggressive store additions, particularly in the Zudio format.However, muted same-store sales growth and cautious management commentary on demand, amid geopolitical uncertainty and rising input costs, remain near-term concerns.
Citi reiterated its ‘Sell’ rating with a target price of ₹2,950. While revenue growth of 19% year-on-year came in below its estimates, the brokerage said EBITDA margins surprised positively due to stronger gross margins and lower operating costs.
Citi said that lower employee, rental and operating expenses per square foot continue to support profitability, particularly as Zudio expands into smaller towns.
However, it believes a pickup in revenue growth will be essential for the stock’s premium valuation to sustain.
