Buy This Multibagger Midcap Tata Group Stock For 11% Returns In Short Term

Trent Limited, a Tata group company is a top pick by Axis Securities. The brokerage suggests 'buy' the stock of the company for a target price of Rs 1,530 apiece. According to the given estimated target price by the brokerage, the stock is likely to gain 11% gains in the short term, 6-9 months. It is a mid-cap Speciality Retail company - Tata Enterprises. It has a market capitalization of Rs 49,410.98 crore.

Stock Outlook

Trent's stock on 6 August closed at Rs 1,389.95 apiece, after falling 0.80% from its previous close. The stock hit the 52-week low at Rs 953 apiece on 20 September 2021, and the 52-week high at Rs 1,522.50 apiece on 18 August 2022, respectively. It is currently trading its low on Intraday trade.

Returns on investments over the past 5 years

The stock in the past 1 week has fallen 1.23%. However, it has gained 5.63% in the past 1 month and 25.82% in the past 3 months, respectively. Over the past 1 year, it gave a positive return of 37.63%. In the past 3 and 5 years, it has given multibagger returns of 201.84% and 378.72%, respectively.

Retail back to pre-pandemic levels

Consumer sentiments have improved with a gradual economic reopening including offices, colleges, holidays, and marriages, among others. This is manifested in Trent's operating performance in Q1FY23. The company reported ~39% revenue growth sequentially, the highest among peer retail players. Its fashion concepts registered the highest-ever quarterly sales in Q1FY23. "We expect this momentum to continue in forthcoming quarters as well, especially when FY23 is likely to be free from Covid-induced restriction," the brokerage has said. 

On an expansion spree

Trent added 125 stores in FY22 across Westside and Zudio, taking a total count to 435 stores in FY22. This exceeded the management's guidance of 425 stores in FY22. "We believe Trent is likely to continue its expansion spree and intends to build 135 stores each in FY23 and FY24 to capitalize on the strong demand outlook," the brokerage has said.

 

Gunning on Omni-channel strategy

Online channel registered robust growth of 74% in FY22 and contributed 7% to the Westside revenues even as stores recovered fully. Trent has also launched exclusive styles on its online platform which is witnessing encouraging traction. It is investing significantly in resetting the technology stack across the entire value chain to make it commensurate with the growing scale and the growth agenda.

Improving return profile across segments

Reducing losses in Star Bazaar and improving traction in Inditex JV are also positive signs for the company. Over the last couple of years, Trent, with its Star food business has pursued the model of tight footprint stores, sharp pricing, and focus on fresh and own brand offerings. This model is resilient and exhibits strong economic viability.

Outlook & Valuation

Superior store metrics, supply chain optimization, diligent focus on cost rationalization, aggressive store expansion, higher contribution from private brands, and innovative offerings in value space would be key growth drivers in the long run.

Recommendation

The brokerage said, "We recommend a BUY rating on the stock with a TP of Rs 1530, implying an upside of 10% from the current levels."

About the Company

A Tata Group company, Trent is a leading branded retail company that operates stores across five concepts - Westside, Zudio, Star, Landmark, and Utsa. Trent's flagship concept - Westside offer branded fashion apparel, footwear, and accessories for women, men and children, along with a wide range of home furnishings and decor. Trent's value fashion concept - Zudio offers fashion at irresistible prices for men, women, and children. Other formats include Star Bazaar (Hypermarket and supermarket store chain), and Landmark (which offers a curated range of toys, frontlist books, stationery, and sports merchandise. The company also operates subsidiaries of Zara and Booker stores in India.

Disclaimer

The stock has been picked from the brokerage report of Axis Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.