Despite its high valuation, brokerages believe Trent has additional upside potential since its industry-leading growth and outstanding financial performance are likely to support high multiples.
Trent’s share price rose 5% in early trade on June 13 to a 52-week high of Rs 1,675, a day after the Tata group firm announced an aggressive expansion strategy at its annual general meeting, which brokerages applauded.
Other highlights from the AGM included a forecast of 30 new Westside stores, 10 Samoh stores in FY24, and a Rs 800 crore gross capital investment estimate for the current fiscal year. The company is also planning an international growth.
- Brokerages praised the company’s expansion plans as well, with Nuvama Institutional Equities and Motilal Oswal Financial Services issuing “buy” recommendations on the stock.
- Nuvama also increased its EBITDA (earnings before interest, taxes, depreciation, and amortisation) forecasts for Trent by 10%/140% to account for larger store openings.
- While the company is still adjusting to Zudio’s franchise model, its growing share is improving the returns profile, making the stock a top option for Nuvama.
Even while on an aggressive expansion spree beginning in FY23, the company was able to maintain its financials thanks to Zudio’s growing profits. Motilal MOFSL anticipates Trent to maintain its traditionally strong footprint growth through its expansion ambitions.
Despite Trent’s wealthy valuations — it trades at a P/E of 54.8x on an FY25E basis — Motilal Oswal feels the company’s excellent growth potential and historically robust performance justifies its higher multiples.
According to ICICI Securities, the company’s industry-leading performance and sustained revenue growth would underpin its premium valuations.
Look at more info: https://learningsharks.in/
Follow us on insta” http://learningsharks/