Tata's retail arm Trent stock surges 8.7% after Q3 earnings

After the firm announced its quarterly earnings for Q3, the shares of Tata Group's retail arm Trent went up over 8%. Trent shares went up 8.7% to 1343.25 against the previous close of 1235.70 on the BSE. Trent stock is trading higher than the 200 day, 20 day, 50 day and 5 day moving averages but lower than 100 day moving averages.

The stock has gained 25.77% in a year and lost 0.5% since the beginning of the year. The firm's total changed hands of 1.44 lakh shares, which was a turnover of Rs 18.88 crore on the BSE.

The firm's market cap rose to 47,670 crore.

On November 2, 2022, the stock hit a 52 week high of Rs 1,571 and a 52 week low of Rs 983.70 on May 12, 2022. Later, the Trent stock ended 8.64% higher at Rs 1342.45 on the BSE.

The Tata group company reported a 21 percent increase in net profit for the quarter ended December 2022, up from Rs 132.89 profit a year ago. The company's revenue increased by 61 per cent to Rs 2171 crore for the three month period against Rs 1347.76 crore in the corresponding period of the previous fiscal year.

A higher share of low-margin Zudio, the reversal of the inventory provision in the corresponding quarter and discounting dragged down EBITDA, but standalone EBITDA grew only 15% 19%, dragged down by lower gross margins.

Motilal Oswal has assigned a target price of 1500, 21% above the current market price of 1236 post Q3 earnings.

We cut our FY 23 24 EBITDA estimates by 7% 4% and included a standalone revenue EBITDA CAGR of 28% 30% over FY 23 - 25, led by a strong 21% footprint addition and healthy SSSG. We expect a revenue EBITDA CAGR of 28% 30% over FY 23 -- 25, backed by strong footprint addition and robust LFL growth across segments. The strong growth opportunity is what keeps the Buy rating at a target price of Rs 1,500, according to the brokerage.

HDFC Securities has a target price of Rs 1040 per share and it has a sell call on the Trent stock.

Trent had a stellar topline growth. Standalone revenue grew 36% CAGR three-year to Rs 21.7 billion. We suspect that Westside's growth remains handsome HSIE: 3 yr CAGR 15% Zudio's blitz scaling continues to be the big needle-mover. The F&G format Star is finding its bearings and improving its sales density. There are costs that come with aggressive expansion. The profitability was disappointed. PBTM came in at 9.6% HSIE: 12% due to front-loading of Zudio related costs. HDFC Securities said we kept our FY 24 25 EBITDA estimates steady and maintained SELL, with a SOTP-based TP of Rs 1,040 share.