Trent Q1 Results Review - Earnings Beat Continues: Motilal Oswal

Motilal Oswal Report

Trent Ltd. continues to report strong performance despite weak consumption reported by other retailers. Standalone revenue grew 57% YoY in Q1 FY25 (five-year compound annual growth rate of 40%), aided by store expansion of Zudio (+44% YoY) and double-digit same-store sales growth in fashion concepts.

This, along with gross margin improvement (170 bp) and operating leverage, led to 67%/2.3 times YoY growth in Ebitda/profit after tax (16%/12% beat). Star format also reported strong SSSG (+22%) with six store addition.

Based on strong revenue productivity, aggressive store additions, margin tailwinds from moderating raw material, and operating leverage, we estimate a CAGR of 41%/52% in revenue/PAT over FY24-26.

The continued momentum in Star and improving store metrics offer further upside potential. We reiterate our Buy rating with a revised target price of Rs 7,040, given Trent's strong growth opportunity going forward.

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