Trent Ltd shares fell sharply by 9% in early trade on the NSE, hitting ₹5,712 following a downgrade by Nuvama from 'Buy' to 'Hold'. The brokerage also reduced the stock’s target price to ₹5,884 from ₹6,627, citing rising competition, slowing momentum in the retail segment, and premium valuations as key concerns.
Despite Trent delivering stellar returns over the last 3-4 years—fueled by strong profit growth and rapid expansion—the stock has remained largely flat over the past month, signaling a pause after its long bull run. Valuations have reached stretched levels, making the stock vulnerable to any slowdown in earnings growth.
Nuvama’s View:
Nuvama stated that Trent’s current growth rate is falling short of the management’s aspiration of 25% CAGR. The brokerage has cut revenue estimates for FY26/FY27 by 5%-6% and EBITDA by 9%-12%. It also highlighted concerns about the pace of expansion and the need for businesses like Zudio Beauty and Star Bazaar to stabilise before scaling up. While Star Bazaar could become a major contributor in the long term, its performance depends heavily on the company’s ability to build scale in the food retail segment.
Morgan Stanley’s View:
Morgan Stanley, however, retains a more constructive stance. It has an Overweight rating on the stock with a target price of ₹6,359, expressing confidence in Trent's long-term structural growth story. The firm supports management’s aspiration to grow revenue by 10x from FY2023 levels, projecting a 25-30% CAGR over the next five years. According to Morgan Stanley, competition is not a major concern, as there is room for multiple players in India’s rapidly evolving retail space.
Key Updates from Trent’s AGM:
Trent reaffirmed its 10x revenue growth target announced during the FY23 AGM.
The company plans to open over 250 stores across formats in FY26, with scope for more depending on market conditions and availability of investable properties.
Star Bazaar is expected to be a major future growth driver, potentially bigger than Westside or Zudio, given the scale of the food and grocery sector.
No merger plans between Star Bazaar and Big Basket, as the two operate in different price segments and business models.
While both brokerages recognize Trent’s long-term potential, the divergence lies in the outlook for near-term execution. Nuvama urges caution due to valuation and competition risks, while Morgan Stanley emphasizes the strong growth framework and market opportunity.
Investors may continue to remain divided as Trent navigates short-term headwinds while pursuing its aggressive long-term goals in India’s booming retail mark
Disclaimer:
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