Tata GroupNoel Tata-headed retail arm Trent reports 79% growth in net profit 199 crore on a year-on-year (YoY) revenue growth of 85%, as Westside registered an SSSG of 49% YoY and 9% at the pre-Covid level. Trent was trading about 0.2% higher on the stock 1,078 each on the BSE in Friday’s session.
Trent’s Q3FY22 revenue was ahead of its estimates, while EBITDA was in line with ICICI Securities’ expectations. Trent expects to exit FY22 with over 425 combined stores (Westside + Judio), which means healthy store additions in Q4FY22 as well.
“We maintain BUY with a revised DCF-based target price of Rs 1,250 per share (earlier: 1,230), given the company’s strong track record of execution,” the note said. However, the brokerage views the extended lockdown and lower discretionary spending as key risks.
Trent chairman Noel N Tata attributed the strong numbers to rising immunizations, further easing of pandemic-related restrictions and rising consumer sentiment due to the festive season.
The Management of the Company believes that the Star Bazaar Kirana business model of tight footprint stores, fast pricing, fresh/focus on own brands etc. is witnessing resilient customer traction and enthusiasm. Therefore, the management will develop its assets on the basis of this model.
Analysts at PhilipsCapital expect revenue/EBITDA to grow 6%/9.4% and 3.4%/10.6%, respectively, for FY22/23, on higher than expected store openings and a strong recovery.
“We maintain our rating on BUY with SoTP-based target price 1,298 (earlier 1,207 each). Trent will continue to deliver industry leading Revenue/EBITDA CAGR of 20%/23% in FY 20-24e with the best in working capital. In the medium term, there may be further upside from the turnaround of the grocery vertical,” he said in a note.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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