Trent share price jumps over 6% to hit fresh record high on Q4 boost

Trent’s share price surged after its Q4 result showed a multi-fold jump in consolidated profit while revenue jumped over 50 per cent for the quarter.

Trent Q4 result

On Monday, April 29, Trent reported a robust 51 per cent year-on-year (YoY) jump in revenue from operations for Q4FY24 to ₹3,297.70 crore against ₹2,182.75 crore in the same quarter last financial year.

The Tata Group’s speciality retail company, known for brands like Westside and Zudio, reported a remarkable surge in consolidated net profit for Q4FY24, reaching ₹712.09 crores. This represents an extraordinary year-on-year increase of nearly 16 times, or a staggering 1,484 per cent jump, compared to a profit of ₹44.95 crore in the corresponding quarter of the previous year.

The company’s profit shot up in the last quarter due to a one-time gain of ₹543 crore. This boost came from a change in how they handle lease contracts for their stores. They reviewed and adjusted how they measure and recognise these contracts, leading to a significant gain for the quarter.

“The term of leases has been reassessed, resulting in an exceptional gain of ₹543 crore, tax impact thereon is ₹137 crore (net of tax ₹406 crore) and the same has been recognised as an exceptional item. Consequently, the ‘right of use assets’ and lease liabilities stand reduced by ₹2,720 crore and ₹3,247 crore respectively. The EPS without this exceptional gain is ₹28.95,” said the company.

Operating EBIT margin for Q4FY24 stood at 8.2 per cent against 2.8 per cent for Q4FY23.

The company added 12 Westside and 86 Zudio stores across 65 cities including 25 new cities during the quarter. As of March 31, 2024, the store portfolio included 232 Westside, 545 Zudio and 34 stores across other lifestyle concepts, according to Trent’s exchange filing.

Trent share price closed about a per cent higher on April 29.

Trent shares trend

Trent shares have seen whopping gains in the last one year. As of April 29 close, Trent shares have surged 218 per cent over the last year. 

They hit their 52-week low of ₹1,368 on May 2 last year. At the current market price of ₹4,669.95, they have gained over 241 per cent from their 52-week low level.

Should you buy after the Q4 result?

Most brokerage firms are positive about Trent’s growth prospects and say the stock still has some steam left despite strong gains in the last year. 

Brokerage firm Motilal Oswal Financial Services has maintained a buy call on the stock and revised its target price to ₹4,870, citing the continued momentum in retail chain ‘Star’ and improving store metrics offer further upside potential.

Moreover, the brokerage firm believes Trent’s revenue growth, driven by healthy SSSG (same-store sales growth) and productivity, robust footprint additions, and healthy scale-up in Zudio, offers a huge runway for growth over the next three to five years.

“Trent’s strong performance with 10 per cent LFL (like-for-like) growth and robust footprint additions is an outlier in our retail coverage universe which is facing a challenging demand environment,” Motilal said.

“Unlike peers who passed on the sharp raw material price increases last fiscal, Trent absorbed the impact, seeing strong customer reception and is now reaping the benefits as raw material prices turn benign,” the brokerage firm added.

Motilal largely kept revenue and EBITDA estimates unchanged. However, it has raised its standalone PAT (profit after tax) estimates by 9 per cent and 7 per cent for FY25 and FY26, respectively, due to the reassessment of lease liability.

“Over FY24-26, we factor in a CAGR of 32 per cent, 30 per cent and 38 per cent in standalone revenue, EBITDA and PAT, respectively, led by a strong 20 per cent YoY footprint addition and healthy SSSG,” said the brokerage firm.

Brokerage firm Antique Stock Broking upgraded the stock to a ‘buy’ from a ‘hold’ with a revised target price of ₹4,876 from ₹3,771 earlier, based on SoTP valuation on FY26E.

“After the strong performance in Q4FY24, we raise our EBITDA estimates by 22 per cent and 35 per cent for FY25 and FY26, respectively, by factoring strong growth driven by aggressive store expansion of Zudio and improvement in profitability due to operating leverage,” Antique said.

The brokerage firm expects sales, EBITDA and PAT growth of 36 per cent, 45 per cent and 56 per cent CAGR, respectively, over FY24–26E driven by the addition of 25 stores of Westside and 250 of Zudio per annum for FY25 and FY26.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 30 Apr 2024, 09:35 AM IST