Trent Share Price Hits Life High, Breaches Morgan Stanley Target

Shares of Trent Ltd. hit a life high on Tuesday, climbing as much as 8.38% to Rs 8,073.4, breaching Morgan Stanley's target price of Rs 8,032. The rally was driven by positive brokerage views amid the company's strategic expansion into new segments, including lab-grown diamonds and mass-priced beauty products.

Kotak Institutional Equities highlighted Trent's entry into lab-grown diamonds under the brand name 'Pome'. This jewellery line, launched in Westside stores, offers a disruptive pricing model with 1-carat solitaire rings priced between Rs 24,000 and 29,000, significantly lower than natural diamonds. 

Pome could become the "Zudio of the LGD jewellery market," posing a potential challenge to Titan’s everyday jewellery and solitaire businesses, which account for a third of the company’s sales, Kotak said.

Additionally, Morgan Stanley shared an update on Trent’s foray into the mass-priced beauty segment under Zudio Beauty, which recently opened its first store in Bengaluru. 

Earlier in June, Trent's Chief Executive Officer P Venkatesalu stated that the company's beauty and personal care category has been rapidly scaling due to increased customer indulgence. Emerging categories like beauty, inner wear, and footwear now contribute 20% of Trent’s standalone revenues, compared to just 10% earlier.

Trent has also been making significant strides in its fashion and retail businesses, achieving a revenue CAGR of 39% since the first quarter of the 2020 financial year.

Citi Research initiated coverage on Trent with a 'buy' rating and a target price of Rs 9,250, indicating a potential upside of 21.5% from its last close, according to a note on Sept. 25. 

Trent's transformation from a single-format retailer to a multi-format, multi-category player is driving higher revenue growth compared to its retail peers, despite weak consumer sentiment, Citi said. The brokerage expects Zudio and other brands under Trent to pilot more formats that could drive future growth.

Citi Research places Trent at the top of its India consumer discretionary and retail pecking order, citing a strong revenue and EBITDA CAGR of 41% and 44%, respectively.

Trent recently joined the Nifty 50 list on Sept. 30 as a result of these expansions. With new product categories and aggressive expansion strategies, brokerages remain optimistic about Trent’s potential to continue outperforming its peers in the long term.

Shares of Trent rose as much as 8.38% during the day to Rs 8073.40 apiece on the NSE. It was trading 7.85% higher at Rs 8034 apiece, compared to a 0.79% advance in the benchmark Nifty 50 as of 3:10 p.m. 

The stock has risen 286.32% in the last 12 months and 162.92% on a year-to-date basis. The total traded volume so far in the day stood at 3.4 times its 30-day average. The relative strength index was at 70.65.

Thirteen out of the 21 analysts tracking Trent have a 'buy' rating on the stock, four recommend a 'hold' and four suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 18.4%.