Macquarie initiated coverage on Tata Group’s retail fashion company Trent with an ‘Outperform’ rating, calling it as Showstopper. It sees an upside of 29% with a target price of Rs 7,000. According to a report by the international brokerage firm, Trent leads the Asia fashion retailer space through an agile supply chain, design capabilities, and mix of owned as well as franchisee store additions. These points along with the large opportunity landscape in the country is driving industry leading metrics for the company.
Macquarie on Trent: Outperforms Asian peers
Trent is India’s leading fashion retailer which is in the mid-premium space. It outperformed Asian peers in terms of growth, return profile, and inventory turns. The company’s profitability comes through frequent style drops, and expansion via owned or franchisee stores. Its sales have jumped at a compounded annual growth rate of 45% over FY23-25. The margins expanded on a steady basis. “Trent leads fashion retailers in Asia, with superior inventory days and return profile,” said Macquarie.
ALSO READJM Financial has Buy recommendation on L&T; 3 reasons why Macquarie on Trent: Tailwinds to help Trent
Trent’s supply chain strengths and design capabilities, built with years of experience of Indian design sensibilities/fabric sourcing, are difficult to replicate. “We see scope to expand Zudio given its current store count of 700 vs Reliance Trends’ over 2,000 stores,” read the report. Plus, the competitive concerns about Shein’s entry are overblown as it would be difficult for Shein to replicate its China production cost advantage with an India-based supply chain.
Macquarie on Trent: Managing inventory
The other ability Trent has is to manage its inventory. The ability to ensure that styles which garner interest do not face stock-out issues, while maintaining a relatively smaller inventory for less popular items is a key balancing act for retailers. “Trent has been able to solve these issues through the development of an agile supply chain and a design team with a high level of understanding of consumer trends,” said Nuvama.
ALSO READM&M, TVS Motor, Motherson Sumi, Uno Minda are Nuvama’s top 4 auto picks Trent result in Q3
The company reported a 33% year-on-year growth in its consolidated net profit for Q3 FY25 to Rs 497 crore, as against Rs 374 crore in the same quarter of the previous year. The Q3FY25 revenue from operations stood at Rs 4,657 crore,
» Read More
