Despite an 11% YoY increase in Q2 consolidated profit to Rs 377 crore and a 16% YoY rise in revenue to Rs 4,818 crore, brokerages flagged moderation in operating metrics and cautioned on the outlook.
While Trent delivered double-digit growth in profit and revenue in Q2, multiple brokerages have raised concerns around the pace of growth going forward. Margins have shown some resilience due to cost-saving measures, but weakening LFL trends, high base, and subdued consumer sentiment have resulted in target price revisions and cautious stances.
Store expansion and segmental diversification continue to be areas of focus, but the road to sustained revenue acceleration appears to be closely watched.
Here is what brokerages are flagging:
Jefferies: Hold | Target Price: Rs 5,000
Jefferies has maintained a Hold rating on Trent but lowered its target price to Rs 5,000.The brokerage noted that “rev growth decelerated further, to 17%, a multi-quarter low.” Operating EBITDA margins were “nearly flat; hence, growth was just in line with revs.” The firm observed that while Zudio led the revenue growth, growth moderation continued due to a higher base, high competition, and weak demand.On margins, Jefferies reported that consolidated gross margin “declined c.55bps YoY/c.185bps QoQ to 42.6%.”
While reported EBITDA margin improved to 17%, Op EBITDA (pre-Ind AS) was marginally down YoY at 11.9%. The firm attributed margin control to productivity and automation initiatives, even though operating EBITDA grew 14% to about Rs 5.8 bn.
Revenue per square foot saw a notable drop, with Jefferies stating that “standalone revenue per sqft declined c.17% YoY, with a slightly higher decline in GP/sqft.” On a unit basis, “Op EBITDA declined 17% YoY.”
On segment performance, it highlighted that fashion growth remained weak in LSD in 2Q, similar to 1Q, while store additions picked up with 40 net adds in Zudio and 13 in Westside.
Jefferies concluded: “We cut our Op EBITDA estimates for FY26-28e by c.9% post the result and maintain our Hold rating with a lower PT of Rs5,000. The stock has corrected c.15% in the past six months, given the earnings downgrade and growth moderation. We are unsure whether the worst is over; hence, we stay on the sidelines.”
Motilal Oswal: Buy | Target Price: Rs 6,000
Motilal Oswal has reiterated its Buy rating but revised the target price to Rs 6,000.
The brokerage acknowledged that “TRENT’s growth rate has decelerated sharply in the last few quarters due to weak LFL amid a subdued demand environment.” However, it believes the company continues to display strong cost controls to report healthy EBITDA growth.
The brokerage noted confidence in Trent’s long-term strategy, highlighting its robust footprint additions, strong double-digit growth, long runway for growth in Star and potential scale-up of emerging categories (Beauty, Innerwear, Footwear, and LGDs).
It raised FY26–28 reported EBITDA estimates by 4–5%, but cut FY27–28 earnings estimates by a similar margin due to higher depreciation.
Motilal Oswal builds in a CAGR of “17%/20%/14% in standalone revenue/EBITDA/PAT over FY25-28” and values the stock on “44x Dec’27E EV/EBITDA for the standalone business, ~3x EV/sales for Star JV, and ~1.5x EV/EBITDA for Zara JV.”
HDFC Securities: Reduce | Target Price: Rs 4,300
HDFC Securities has maintained a Reduce rating on Trent with a target price of Rs 4,300. The brokerage observed that growth fatigue is increasingly visible across formats, with standalone revenue growing 17.1% YoY to Rs 47.24bn and SSSG spiraling down for the first time in over three years to low single digits in H1.
The firm noted that despite 13 and 40 net additions in Westside and Zudio, respectively, the grocery format Star declined by 2.1% YoY due to store renovations. Pre-Ind AS EBITDAM remained stable at 12.2% (vs 12.3% in Q2FY25). HDFC Securities commented that the growth ask for the second half of FY26 is now as high as ~29%+ revenue growth just to match consensus.
It values the stock at “60x Sep-27 P/E for standalone business and 4x Sep-27 EV/sales for Star.”
Elara Capital: Accumulate | Target Price: Rs 5,500 (revised from Rs 7,020)
Elara Capital has downgraded Trent from Buy to Accumulate and pared the target price to Rs 5,500 from Rs 7,020.
The firm noted that “Q2 revenue was below estimates, though margin beat was aided by lower rentals and employee costs despite gross margin pressure.” It added that “LFL growth was in low single digits as new entrants scaled aggressively, with competitive pricing and improved quality.”
Elara expects the focus on quality upgrades may cap gross margin in the near-to medium term, and forecasts EBITDA margins at 16–17% in FY26E–28E.
The brokerage remarked that the fashion portfolio saw aggressive expansion and Zudio’s network expanded by 25%, but LFL growth has slowed due to traction from new city additions… and competition from new entrants.
It values the business at 40x EV/EBITDA (FY27E) for the fashion portfolio and 40x Sep 2027E (versus 50x) EV/EBITDA, Star Bazaar at 4x EV/sales and Zara & Massimo Dutti at 30x EV/EBITDA.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)