But it’s also the worst Nifty 50 stock this year, down about 26% since January 1 – shaking investors. According to Bloomberg, the company’s enterprise value to EBITDA ratio (EV/EBITDA) fell from 78.5 in fiscal 24 to 67.6 in fiscal 25, and is expected to further decline to fiscal 51 in fiscal 26.
HDFC Securities analyst Jay Gandhi noted the stock’s surge ₹More than 2,000 people in August 2023 ₹In October 2024, 8,000 people were driven by the active expansion and productivity gains of Zudio stores, and both have now lost momentum, leading to corrections. Zudio is a fast fashion brand from Trent that provides affordable clothing for budget-conscious customers.
Also read: Trent
After reaching the peak ₹Last October 8,345 shares, now stock trading ₹In the broader market correction, there were 5,200 people. “Any meaningful correction here has to be led by Zudio,” Gandhi said, adding that competitors are increasingly competing, and competitors who are opening similar stores can also increase pressure on stocks.
However, he also said Trent’s long-term growth will be driven primarily by Zudio, followed by Star, a range of supermarkets and large supermarkets that have great potential if scaled effectively.
Zudio Giveth and Zudio takeeth leave
The stock has been rolling up since August 2023, driven by a rapid increase in Zudio stores – from 168 at the end of 2021 to 635 at the end of 2024.
Trent continues to achieve impressive results, with revenue up 42% year-on-year and net profit up 60% so far ₹1,222.81 million. However, the expansion of Zudio and Westside Store and the pace of same-store sales growth this fiscal year disappointed investors.
According to a March 10 Kotak Institution Stock Report, Trent’s Westside Store locator initially showed it had 269 such stores, which was later corrected to 240, reflecting a net increase of only eight stores so far in FY25. Brokerage estimates that by the end of FY25, the number of stores will be 243, which means a net increase of 11 stores in the fiscal year, well below the net increase of 26, 14 and 18 in FY222, FY23 and FY24.
Maximum is not always better
The company closed 21 Westside stores in the first nine months of FY25, replacing them with larger outlets it believes provide a better shopping experience. However, larger stores often take longer to mature and produce lower per square foot sales, which may trade same-store sales growth in the short term, but should pay off in the long run.
Also read: ‘Westside course helps Zudio; selling clothing online is inefficient’
“We believe this leads to a 2% year-on-year increase in revenue throughput in the West and may still be some resistance,” Kotak analysts said.
The broker said Zudio’s store count is currently 675, meaning that net sales have increased by 130 stores so far in fiscal 25, well below expectations of 190-200. It said: “Similar to the West Side, the new Zudio store is also larger.
“No major problems”
“There’s nothing wrong with Trent,” said Soham Samanta, a research analyst at Centrum Broking. He called the TATA Group Company a CAGR story of 40%, but noting that Zudio, which accounts for about 55% of Trent’s combined sales, is cool from around 40% to 35% over the past nine months. This slowdown delays valuation, leading to a complete correction of stocks.
Meanwhile, management plays safely at a measured rate of growth, he said. Going forward, key factors on the track include Zudio’s sales growth, similar sales growth, store expansion, and Star’s margin performance. He said he was optimistic about Trent’s multi-pronged growth strategy and strong operating results, but warned that a slower increase in Zudio’s stores could drag down the stock. Slower consumer demand is another key near-term risk to company earnings.
Also read: Behind Trend Performance of Trent
Currently, Trent focuses on organic growth by building its own brands such as Misbu, Samoh and Utsa, while expanding to Beauty (Zudio Beauty) and Lab Grown Diamonds (Pome). Competitor Aditya Birla Fashion and Retail Co., Ltd. is addressing acquisition-related challenges, while VMART is looking at turnaround.
