ICICI Securities Assigns Buy On Midcap Tata Group Stock For High Gains, Board Recommends Dividend

ICICI Securities has placed a "Buy" on stock of Trent Limited, a part of the Tata Group, with a target price of Rs. 1,600 apiece. The brokerage sees a potential upside of 17% from its current level if purchased at the current market price. The brokerage placed a buy on the stock post the announcement of the Q4FY23 results of the company.

On Friday, April 28, 2023, the company announced a dividend of Rs 2.20 per equity share of Rs 1 each for the financial year ended 31st March 2023. The recommended dividend is subject to approval by the shareholders of the company at the Annual General Meeting (AGM).

According to the brokerage, Revenue grew 75% YoY (35% 4Y CAGR) led by 23% LFL growth in Westside. Retail expansion stood at 30% YoY to 566 fashion stores (Westside and Zudio).

Trend is a midcap Branded Apparel sector stock of the conglomerate Tata Group. It has a market capitalisation of Rs. 48,621.80 crore.

Recommended Dividend of Rs 2.20/share

According to the regulatory filing by the Board of Directors of Trent Ltd., "the Board of Directors at their Meeting held on 27th April 2023 have recommended Dividend of ₹ 2.20/- per Equity Share of ₹ 1/- each (220%) for the Financial Year ended 31st March 2023. As per the Income Tax Act, 1961 (the Act), dividends paid or distributed by a company shall be taxable in the hands of the shareholders. The Company shall, therefore, be required to deduct tax at source at the time of making the payment of Dividend, if declared at the Annual General Meeting of the Company to be held on 12th June 2023."

Stock's Current Market Price, 52-Week Low/High, and Returns

On Friday, April 28, 2023, the stock of Trent last traded at Rs 1,367.75 apiece, down 1.05% from its previous close of Rs. 1,382.30 apiece. The 52-week high of the stock is Rs. 1,566 apiece and 52 week low is 982.85 apiece, respectively.

The stock has fallen 1.13% in the past 1 week. It gained 5.93% in 1 month and 16.28% in 3 months, respectively. It has given 11.58% positive return in 1 year, 178.14% in 3 years and 289.84% in 5 years, respectively.

Valuation and risks

ICICI Securities said, "We increase our EPS estimates for FY24E-FY25E by 1-2%. We model revenue, EBITDA and PAT CAGRs of 14%, 17% and 17% respectively, over FY23-FY25E. We maintain BUY rating with a DCF-based target price of Rs1,600,"

According to the brokerage, the Key downside risks are : (1) slower than expected pick-up in discretionary consumption, (2) rise in competitive intensity from peers (Reliance Trends, Max, Pantaloons, etc.) and (3) execution challenges. Key upside risks: success Zudio and other pilot formats.

Disclaimer - The stock has been picked from the brokerage report of ICICI 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 consult with certified experts before making any investment decision.