1:10 Split + 25 Dividends: TATA's 73-Yr-Old Retail Stock Gained 9% In 5 Days; 3 Brokers Say BUY, Rs 8300 TP

Trent Ltd is Tata Group's 73-year-old retail giant. This stock price surged by nearly 4% on June 23, after it entered the benchmark Sensex as part of BSE's rejig. Notably, Trent has given impressive returns in past 5 sessions, surging by nearly 9%, which is better than Sensex's performance. Three brokerages have recommended BUY on Trent with highest target price at Rs 8,300.

Motilal Oswal On Trent:

Despite robust growth over the past few years (6.5x revenue growth over FY19-25), management indicated that Trent's share in India's fashion and lifestyle retail industry remains in low-single digits. The company believes there is still a long runway for growth and aims to grow at 25%+ annually over the longer term through a multibrand, cluster-based approach to increase its market share in key micro-markets.

Management is cognizant of the impact on return metrics of their cluster focus approach, but believes there is enough headroom to drive operating leverage in the business. The company remains bullish on the growth opportunity in the Star format, but will continue to grow sensibly while focusing on the right economics and improving its differentiation through a rising share of non-third-party brands (73% currently).

We continue to like Trent for its superlative execution and long growth runway. Reiterate BUY with an unchanged TP of INR6,900.

Sharekhan On Trent:

Trent continues to follow a customer-centric approach to drive growth focusing on improving presence, better product availability and emphasis on value proposition to stay ahead of fashion and lifestyle market which is expected to clock a 1012% CAGR over FY25-28. In the near term, management expects growth to be largely driven by store addition while like-for-like growth is expected to remain in mid-single digits.

Innovation in product portfolio, 100% contribution from own brands, aggressive store expansion, scaling up of the Star business and leveraging on digital presence will be key growth drivers in the medium term. Better store fundamentals and efficiencies will drive the profitability and return profile going ahead. The stock trades at 51x/42x its FY26E/FY27E EV/EBITDA, respectively. We maintain a Buy with a revised SOTP-based price target (PT) of Rs. 6,781.

Elara Capital On Trent:

We attended Trent's (TRENT IN) analyst and investor meet. Key takeaways are: a) TRENT continues to deepen its India-first strategy (to sidestep global macro volatility), with focus on own-labels, b) it is driving consumer value via high-frequency categories/brands, c) rationalizing select stores to drive better growth, d) it is nurturing scalable new brands in next five years, and e) calibrating spend with celebrity-less marketing to curtail A&P investments.

TRENT is confident as regards its legacy choices - Offline only for brand Zudio, full price selling, own-brand playbook, organic brand growth etc. - all aligned to sustain long-term growth. Technology + scale-led cost benefits and product-driven success shall help TRENT gain market share. We maintain Buy with TP unchanged at INR 8,300.

About Trent Ltd:

The Company was originally incorporated as Lakme Limited ("Lakme") on December 5, 1952. Towards this end, in March 1998, Lakme acquired Littlewoods International (India) Private Limited ("LIIPL") from Littlewoods International Limited, U.K. LIIPL was in the business of retailing of readymade garments and related merchandise. In parallel, with effect from January 1, 1998, Lakme Exports Limited, a subsidiary of Lakme, was amalgamated with LIIPL and the merged entity was named as Trent Limited. Subsequently, with effect from July 1, 1998, Trent Limited was amalgamated with Lakme, and the name of Lakme Limited was changed to Trent Limited.

Renowned retail brands like Westside, Zudio, Star Market and MISBU are part of Trent.

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