Trent share price: Buy Trent, target price Rs 1230: ICICI Securities

ICICI Securities has buy call on with a target price of Rs 1230. The current market price of Trent is Rs 1105.85. Time period given by analyst is year when Trent Ltd. price can reach defined target.


Trent Ltd., incorporated in the year 1952, is a Large Cap company (having a market cap of Rs 36880.05 Crore) operating in Retail sector.

Trent Ltd. key Products/Revenue Segments include Readymade Garments, Other Operating Revenue and Rent for the year ending 31-Mar-2021.

Financials

For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 1225.52 Crore, up 124.95 % from last quarter Total Income of Rs 544.79 Crore and up 96.85 % from last year same quarter Total Income of Rs 622.58 Crore. Company reported net profit after tax of Rs 69.98 Crore in latest quarter.

Investment Rationale
Trent’s Q2FY22 standalone revenues increased 1.25x YoY (~25% higher than pre- covid sales in Q2FY20) with EBITDA (post Ind-AS 116) of Rs2.2bn – both above consensus estimates. Store addition momentum continued with seven Westside and 10 Zudio stores being added on a QoQ basis. Online channel registered 95% QoQ growth in Q2FY22. EBIT (pre Ind-AS 116) stood at Rs1.4bn against an EBIT loss of Rs590mn in Q2FY21. Margins to surprise as demand bounces back, the brokerage believes earnings of apparel brands and retail companies may surprise positively led by faster-than-expected demand recovery and expect consensus to turn more constructive with Q2FY22 management commentary. Factoring-in faster-than-expected demand recovery, it increases FY23E-FY24E EBITDA/PAT by 4-5%. Maintain BUY with a revised DCF-based target price of Rs1,230/sh (earlier: Rs1,160) on better margin / cash generation. Key risks: extended lockdowns, and lower discretionary spends.

Promoter/FII Holdings
Promoters held 37.01 per cent stake in the company as of 30-Sep-2021, while FIIs owned 30.13 per cent, DIIs 11.16 per cent.