Stock in Action Today - 08 October 2024

Highlights

1. Trent's share price has gained over 161% year to date in 2024 making it one of the standout performers in the Indian retail sector.

2. Trent's financial performance has shown growth over the past year.

3. Trent's quarterly earnings report highlighted a continuous increase in net profit in the last 3 quarters.

4. For Trent's stock analyst forecasts positive trends for the future.

5. Trent's share price increased from ₹7040 to ₹7900 between September - October.

6. Trent stock has outperformed the market delivering over 280% returns in the last year.

7. Trent is currently trading at ₹7,900 showing a 6% increase as of 11:30 am on NSE.

8. Trent is gaining momentum today following the broader market trend. Nifty is currently trading at 24,984 showing a 0.76% increase after yesterday’s decline.

9. Morgan Stanley has given Trent an Overweight rating, they believe the stock is expected to perform better than the market average. They have set a target price of ₹8,032 for the stock.

10. As per the June quarter filings the company has a 37.01% promoter holding, 13.18% DII holding and 27.87% foreign institutional investor (FII) holding.

What Is Driving the Increase in Trent Shares?

Ratan Tata's Tata Group is making a notable entry into the affordable beauty retail market with the launch of its new store format, Zudio Beauty. This move allows Trent to compete in the mass priced beauty segment, going head to head with established brands like Hindustan Unilever’s Elle18, Sugar Cosmetics, Health & Glow and Colorbar.

While many competitors including Reliance, Nykaa, and Shoppers Stop are concentrating on premium and luxury beauty products, Trent is focusing on budget friendly options. The first Zudio Beauty store has already opened in Bengaluru with plans for expansion into major cities like Gurugram, Pune and Hyderabad.

Trent has previous experience in the beauty market having previously ventured into high end cosmetics through its Tata Cliq Palette stores. Tata also founded Lakme India’s first beauty brand which was later sold to Hindustan Unilever. Zudio launched in FY17 as part of Star stores, has quickly become one of India's largest brands significantly contributing to Trent’s growth due to its unique design and efficient store operations.

In FY24 Zudio surpassed Westside in revenue now accounting for over one third of Trent’s total revenue up from just 8% a few years ago. As of June operates 559 Zudio and 228 Westside stores.

Analyst View on Trent Share

Morgan Stanley has kept an Overweight rating on Trent, setting a target price of ₹8,032. The company’s move into the affordable beauty market with Zudio Beauty has bolstered their confidence. Sales from the Beauty and Personal Care category have become increasingly important in both Westside and Zudio stores. As customer preferences shift towards more indulgent purchases BPC segment has grown significantly. Emerging categories now make up 20% of Trent's standalone revenue up from 10% previously.

Global brokerage firm Citi has started covering Trent recommending a buy rating with a target price of ₹9,250 per share. In its report, Citi noted that Trent is outperforming its peers and prompting upgrades in market expectations.

The brokerage highlighted that Trent’s transition from a single format to a multi format model has led to a remarkable compound annual growth rate (CAGR) of 36% in revenue from FY19 to FY24. 

As a multi category player in fashion, lifestyle, grocery and personal care. Trent is projected to achieve impressive industry leading CAGRs of 41% in revenue, 44% in EBITDA and 56% in profit after tax from FY24 to FY27.

Conclusion

Trent's remarkable growth in 2024 with a 161% increase in share price reflects its strong performance in the Indian retail sector. The company's strategic entry into the affordable beauty market with Zudio Beauty positions it well against established competitors. Analysts are optimistic with Morgan Stanley and Citi both issuing positive ratings and target prices that suggest continued upward momentum. Trent's impressive revenue growth particularly in the Beauty and Personal Care segment and its multi format approach further enhance its market potential. Overall, Trent is well poised for sustained success in the coming years making it an attractive investment opportunity.