News

Published: September 21, 2024
Updated: September 21, 2024

Tata Group's Trent Eyes ₹9,250 Target Amidst 250% Surge in 12 Months

Impressive Growth for Trent Ltd.

Shares of Trent Ltd., Tata Group's fashion and lifestyle arm, have seen a remarkable surge of nearly 254% over the last 12 months, and global brokerage firm Citi has set a bullish target for the stock. According to Citi, Trent's share price could reach ₹9,250, indicating a potential 21% rise from its recent closing levels.

Citi's Bullish Outlook on Trent

Citi has initiated a 'Buy' rating for Trent, highlighting the company’s shift from a single-format business to a multi-format model as a key driver behind its impressive growth. This transition has contributed to a 36% compound annual growth rate (CAGR) in revenue between FY19 and FY24. Citi believes that Trent's future prospects remain strong, forecasting industry-leading CAGRs in revenue, EBITDA, and profit after tax at 41%, 44%, and 56%, respectively, between FY24 and FY27.

Multi-Category Expansion and Strategic Moves

As a leader in fashion, lifestyle, grocery, and personal care, Trent is leveraging its expertise in supply chain management and its successful brands like Westside and Zudio to drive growth. Citi has also noted that Trent's Star brand is experiencing a turnaround. Additionally, the company is working on scaling up other ventures like MISBU, Samoh, and its joint venture with MAS, which could further boost revenue.

Inclusion in Nifty 50 and Potential Inflows

Trent’s strong performance has not gone unnoticed. In August, the National Stock Exchange (NSE) announced the inclusion of Trent in the Nifty 50 index as part of its semi-annual reshuffle, effective from September 30, 2024. This inclusion is expected to bring inflows of up to $647 million into the stock, according to Nuvama Alternative & Quantitative Research.

Analyst Ratings and Potential Risks

Out of 21 analysts tracking Trent, 13 have issued a 'Buy' rating, while four recommend holding the stock, and another four suggest selling. While Citi remains optimistic, it also cautioned about potential risks, such as slower Zudio store expansion, increased competition, and challenges in scaling new business formats.

With Citi’s target price of ₹9,250 and Trent’s inclusion in the Nifty 50 index, the company is positioned for continued growth. However, investors should remain mindful of potential risks in the competitive landscape. Nevertheless, Trent remains a top pick in the consumer discretionary and retail space, with significant growth potential in the years ahead.