While topline may rise up to 36% YoY, EBITDA margin is likely to contract due to soft same-store sales growth (SSSG), cost inflation, and competitive pressures.
As a result, the company’s net profit is likely to take a hit, say brokerages who are evenly divided on this metric. Out of the four estimates considered, two indicate a profit after tax (PAT) decline while others see a low single-digit growth.
The estimates of PhillipCapital (PC), Nuvama Institutional Equities, Motilal Oswal Financial Services (MOFSL) and Kotak Institutional Equities have been considered.
Here’s what their estimates are on these 4 metrics:
1) PAT
– PhillipCapital: Rs 351 crore, up 3% YoY and flat QoQ– Nuvama sees core PAT at Rs 288 crore, down 16% YoY and down 18% QoQ– MOFSL: Rs 356 crore, up 4.1% YoY
– Kotak Equities: Rs 509 crore, up 48.7% YoY and up 45.4% QoQ
2) Revenue
– PhillipCapital: Rs 4,788 crore, up 20% YoY and up 17% QoQ
– Nuvama: Rs 5,061 crore, up 20% YoY and 17% QoQ
– MOFSL: Rs 4,790 crore, up 20% YoY
– Kotak Equities: Rs 5,428 crore, up 36% YoY and up 32.2% QoQ
Blended revenue per store and per square feet based on calculated net revenue will likely stand at Rs 4.72 crore, down 7% YoY and Rs 3,511, down 17% YoY, respectively, PhillipCapital said.
Calling Trent’s revenue growth “weak”, PhillipCapital assumed LFL growth to be -4%. “This would also be because of Trent’s strategy of cannibalization from newly opened stores near high-performing locations, a broader demand slowdown, geopolitical headwinds and the natural impact of a high comparative base,” it said in a note.
Meanwhile, Kotak attributed the strong double-digit revenue growth to new store additions in Zudio (20 net store additions on a QoQ basis) and Westside (5 net store additions on a QoQ basis), partially offset by 5.7% YoY decline in revenue per square feet. We expect YoY area growth of 39%, driven by addition of larger sized stores.
Trent’s revenue growth is expected to remain robust, led by aggressive store additions in Westside and Zudio.
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3) EBITDA
– PhillipCapital: Rs 724 crore, up 19% YoY and up 10% QoQ
– Nuvama: Rs 560 crore, down 8% YoY and down 15% QOQ
– MOFSL: Rs 718 crore versus Rs 611 crore in Q1FY25
– Kotak Equities: Rs 935 crore, up 53.2% YoY and 42.5% QoQ
EBITDA performance is divided. While Kotak expects a sharp rise driven by strong revenue and scale benefits, Nuvama forecasts a decline, citing lower gross margins and competitive intensity. Most brokerages agree margins will remain under pressure due to Zudio’s growing share.
4) EBITDA margin
– PhillipCapital: 15.1%, down 17 bps YoY and down 86 bps QoQ
– Nuvama: 11.7% (↓360 bps YoY from 15.3%)
– MOFSL: 15% in Q1FY26 Vs 15.3% Q1FY25
– Kotak Equities: 17.2, versus 193 bps YoY and 124 bps QoQ
PC modelled 23 bps gross margin contraction YoY, 25% increase in employee expense YoY and 18% increase in other expenses (including rent expense) YoY. It also expects operating margins to contract by 17 bps YoY primarily due to gross margin contraction led by higher Zudio mix.
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