Tata Group Stock Trent Hit 52-Week-High: Buy, Sell Or Hold?

Trent is a large-cap company that deals in the speciality retail sector. Trent Limited is an Indian retail Tata Group company headquartered in Mumbai. On Friday, the stock opened on the BSE at Rs 1755.05 apiece and made a fresh 52-week-high of Rs 1,783.85 during the morning deals. The stock made a 52-week-low of Rs 1,041.85 on (29/06/2022), indicating that after marking a new 52-week-high today the stock was seen trading 70.76% above the 1-year low at the current market price of Rs 1779.15. After a new 1 year high today, Sharekhan sees more upside for Trent and has set a target price of Rs. 2,025.

Trent Financials

In the fourth quarter (Q4) that ended in March 2023, the firm recorded a consolidated net profit of Rs 45.01 crore, up from Rs 20.87 crore in the same period of the previous year. In Q4 FY23, the company's total income grew by 65% to Rs 2,268.06 crore from Rs 1,372.97 crore in the same period the year prior. According to the BSE report, its total income for the fiscal year FY23 jumped to Rs 8,502.94 crore from Rs 4,673.23 crore the year prior. According to the regulatory filing, Trent's total expenses climbed significantly from Rs 4,539.71 crore the year before to Rs 8,031.28 crore for the fiscal FY23. The company is yet to declare its Q1FY24 results.

Buy Trent?

The research analysts of the broking firm said "Trent Ltd maintained its leadership position in FY2023 led by consistent strong double-digit same-storesales growth in its core Westside brand and scale-up in the Zudio business. Revenues/PAT posted CAGRs of 34%/53% over FY2020-23. EBIDTA margins (post Ind-AS 116) declined by 182 bps y-o-y in FY2023 due to higher input prices. However, margins were higher compared to close peers on account of strong business model and efficient cost management.

The company added a net 133 stores under various formats In FY2023 (including 14 Westside stores and 119 Zudio stores) taking total count (standalone) to more than 550 stores. Despite a higher capex, the company managed to generate free cash flow of Rs. 450 crore in FY2023 led by higher operating cash flows that was in turn the result of a shorter working capital cycle. Trent plans to add 30 Westside and 200 new Zudio stores in FY2024. Overall, the company has a capex plan of Rs. 800 crore for FY2024, which will be largely funded through internal accruals. In the coming years, Zudio is expected to be key growth lever with strong store additions, while Westside will deliver consistent growth."

"Trent's FY23 numbers were strong as footfalls bounced back, store additions were higher and performance of Zudio scaled up. Innovation in the product portfolio, scaling up of supply chain, 100% contribution from own brands, aggressive store expansion, and leveraging on digital presence will be key growth drivers in the medium term. The stock is currently trading at 32.2x/26.2x its FY2024E/FY2025E EV/EBITDA. With long-term growth prospects intact and strong balance sheet amongst the retail companies, we maintain our Buy recommendation on the stock with a revised PT of Rs. 2,025," they further added in a note.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.