Trent shares fall 3% despite Q1 beat as analysts diverge on growth outlook
Sell orders outnumber buys by nearly two to one, with 66 per cent of order flow on the sell side
Trent Ltd shares fell 3.54% on Friday, closing at ₹2,997 on the NSE, a decline of ₹110.10 from Thursday's closing price of ₹3,107.10. The stock faced a modest intraday dip to ₹2,985.60 before recovering slightly. A total of ₹745.66 crore was traded, with 24.69 lakh shares exchanged hands. The decline occurred after the company released Q1FY27 standalone results, which exceeded analysts' expectations across most metrics.
Revenue grew 18.5% YoY to ₹5,666 crore, EBITDA expanded 33% to ₹847 crore, and PAT increased 26% to ₹532 crore. Gross margins reached 46.6%, up 149 basis points year-over-year, surpassing most broker expectations. While reactions from analysts were generally positive, opinions varied regarding the growth outlook. Morgan Stanley upgraded Trent to Overweight and set a target price of ₹3,406, while Motilal Oswal and Axis Direct reiterated Buy ratings with targets of ₹3,775 and ₹3,640 respectively.
Macquarie and Bernstein also maintained Outperform ratings with target prices of ₹3,600 and ₹3,500, respectively, citing strong margin execution and store expansion. However, Jefferies kept a Hold rating with a revised target of ₹3,435, pointing out muted low-single-digit like-for-like growth, partially due to store densification.
Citi maintained a Sell rating with a target of ₹2,950, arguing that while margins have surprised, sustained revenue growth is necessary to support current valuation multiples. Trent's trailing PE ratio on the NSE closed at 91.3. The company opened one Westside and 22 Zudio stores in Q1FY27, increasing its network to 301 Westside and 982 Zudio outlets, with over 80% of new Zudio stores located in Tier-II and Tier-III cities.
Management highlighted near-term input cost pressures from raw material inflation and geopolitical uncertainty in West Asia, but stated that value chain interventions and supplier engagement would mitigate the impact. Despite a 15% decline over the past year, Trent's stock has gained about 4.6% year-to-date, outperforming the Nifty 50, which has declined roughly 6% during the same period. Trent's 52-week trading range spans ₹2,184 to ₹3,783.
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