Shares of Tata Group’s retail arm Trent surged 5 per cent on January 15 after domestic brokerage Elara Securities initiated coverage with a ‘buy' rating. The brokerage’s optimism stems from strong growth prospects for Trent’s flagship brands, Zudio and Westside, backed by robust fundamentals and an ambitious expansion roadmap. Elara has pegged the stock’s target price at Rs 8,500, reflecting a potential upside of 38 per cent over the next 13 months.

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Zudio: A rising force in fast fashion

Zudio has emerged as a key growth engine for Trent. The brand’s private-label strategy, coupled with an efficient design-to-shelf cycle, positions it as a standout performer in India’s competitive fast fashion segment. By offering differentiated fashion and ensuring quality at competitive prices, Zudio has managed to carve a niche, maintaining a lead over its peers despite intensifying competition.

Westside’s steady performance

Westside, known for its premium yet affordable offerings, continues to deliver consistent results. The brand’s curated collections, combined with a strong focus on customer preferences, contribute to its steady growth trajectory. Analysts believe Westside will sustain its momentum as Trent expands its footprint in new and existing markets.

Financial outlook and valuation

Elara Securities anticipates Trent’s consolidated revenue, EBITDA, and adjusted PAT to grow at compound annual growth rates (CAGRs) of 27 percent, 29 percent, and 38 percent, respectively, during FY24-FY28. Zudio is expected to lead this growth with a 37 percent sales CAGR. The brokerage’s valuation model assigns a sum-of-the-parts target price of Rs 8,500, valuing the standalone business at 57x EV/EBITDA (September 2027 estimates).

Peer comparison highlights strong metrics

Trent outshines competitors across several parameters, including store size, revenue per square foot, and EBITDA margins, outperforming the industry by 30 to 40 percent. This edge is attributed to its well-structured processes, product-market fit, and consistent quality focus.

Risks to the outlook

While the outlook remains promising, slower-than-anticipated store additions, increased competition, and challenges in aligning with evolving fashion trends could pose risks. However, Trent’s organic growth strategy and dominance in the fast fashion space position it favorably in the long term.

With a strong track record and significant growth potential, Trent remains an attractive bet for investors seeking exposure to India’s booming retail sector.