Trent shares hit all-time high after Westside chain operator clocks two-fold jump in Q3 profit; what should investors do?

Trent Q3 results, Trent share price NSE, Trent share price target: Tata group retail firm Trent’s shares soared to an all-time high on Thursday after the Westside chain operator reported a two-fold year-on-year increase in consolidated net profit to Rs 370.6 crore for the quarter ended December 31, 2023, aided by strong momentum in sales and improved margins. The Trent stock gained by as much as 9.04 per cent to a record Rs 3,935.85 apiece on BSE, surpassing an earlier peak of Rs 3,763.6 touched the previous day. The counter closed at Rs 3,842.7, up 6.47 per cent on BSE.

The company’s consolidated revenue from operations surged 50.5 per cent to Rs 3,466.62 crore for the fiscal third quarter, according to a regulatory filing post-market hours on Wednesday.

Total expenses rose 41.6 per cent to Rs 3,101.4 crore for the three-month period, said Trent, which operates retail stores under brands Westside, Zudio and Star. Read more on Trent Q3 earnings

Trent Q3 results: Management commentary

"Our lifestyle offerings across concepts, categories and channels witnessed strong momentum in Q3 FY24. The growing scale of our operations distinctly enables us to realise greater operating ,” said Noel N Tata, Chairman, Trent.

The gross margin profile of Westside and Zudio continues to remain consistent with earlier trends, the company said.

"Overall, the operating EBIT margin for Q3 FY24 is 13 per cent (8.5 per cent for Q3 FY23). Performance of the business and the growth momentum encourages us to continue with our expansion plans," it added.

Trent shares: Should you buy, sell or hold the Tata group stock?

Morgan Stanley maintained an ‘equal-weight’ rating on Trent after the Tata group firm’s earnings announcement. The brokerage raised its target for the stock to Rs 3,675 from Rs 2,307.

Trent’s topline and margin exceeded Morgan Stanley’s forecasts.“Unchartered growth and profitability execution in FY24 raises conviction in growth sustainability. Growth sustainability will lead to upward earnings revision,” according to the brokerage.

Jefferies maintained a ‘hold’ call on the counter and raised its target for the stock by Rs 50 to Rs 3,500. “We got this company completely wrong,” wrote analysts at the brokerage in a note. According to Jefferies, Trent continues to surprise by the positive overall revenue growth that came impressive on a normal base, with its EBITDA margin at an eight-quarter high partially led by better gross margins.

"Admittedly we underestimated the ramp-up of Zudio as we as management execution. The valuation keeps us on the bay," the brokerage added. During the quarter, Trent added five Westside and 50 Zudio stores across 36 cities, including 13 new cities.

As of December 31, 2023, Trent's portfolio included 227 Westside, 460 Zudio and 28 stores across other lifestyle concepts.

(With agency inputs)

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