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Motilal Oswal Report
Trent Ltd.'s industry-leading revenue growth was driven by:
healthy same-store sales growth and productivity,
robust footprint additions, and
a healthy scale-up opportunity in Zudio offers a huge runway for growth over the next three to five years.
Trent's grocery segment, Star, with a presence of merely 65 stores and annualised revenue of Rs 18.1 billion (FY23) presents a huge opportunity to support growth. Its own brand strategy and curated range are seeing strong customer reception.
We factor in standalone revenue/Ebitda compound annual growth rates of 46%/51% over FY23-25, led by a strong 25% footprint addition and healthy SSSG.
We assign 37 times enterprise value/Ebitda to the standalone business (Westside and Zudio; premium over our Retail Universe, given its superlative growth), two times EV/sales to Star Bazaar, and 15 times EV/Ebitda to Zara on September-25E, and arrive at a target price of Rs 3,140. We reiterate our 'Buy' rating on the stock.
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