Trent extends gains with 7% surge on positive Q3 show, brokerages raise target price

Trent shares extended their gains with the stock rallying up to 7 percent in trade on February 8 following a positive third-quarter earnings report.

Brokerages are positive on the Tata Group firm based on the company’s strong revenue productivity, aggressive store additions, margin tailwinds from moderating RM, and operating leverage.

The retail player reported a consolidated net profit of Rs 370.6 crore for the December quarter of FY24, rising 39.4 percent from Rs 154.81 crore last year.

As of 10.10am, shares of Trent were quoting Rs 3,820 on the NSE, higher by 5.9 percent compared to the previous session’s closing price.

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On February 7, the Tata Group retailer said its revenue came in at Rs 3,466.6 crore, rising 50.5 percent from Rs 2,303.4 crore in the year-ago quarter. “Trent’s strong performance with 10 percent like-for-like growth and robust footprint additions remains an outlier within our retail coverage universe that is witnessing a challenging demand environment,” said Motilal Oswal. “We reiterate our buy rating with a revised TP of Rs 4,200, given Trent’s strong growth opportunity going forward.”

Unlike peers that passed on the sharp RM price increases last fiscal, Trent absorbed the impact, seeing strong customer reception and is now reaping the benefits as RM prices turn benign.

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Morgan Stanley raised its target price on the company to Rs 3,675 per share, as the earnings show beat the brokerage’s topline estimate. The profitability execution in FY24 raised the brokerage’s conviction in the sustainability of Trent’s growth, which will lead to upward earnings revision.

Trent continued to surprise positively, with a significantly better-than-expected third quarter, noted international brokerage Jefferies. The overall revenue was impressive on a normal base. The brokerage sharply raised its EPS forecasts. Jefferies maintained its hold call, but raised its target on the share price to Rs 3,500 per share.

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