Mumbai: Shares of Trent surged to a lifetime high on Tuesday as investors cheered the company’s expansion plans, especially in its value retail brand Zudio, where it plans to add 200 stores during the current fiscal.
The stock rose more than 6% intraday to an all-time high of ₹1,694.75 before closing at ₹1,687.05, up 5.7% from the previous close.
Apart from the Zudio stores, the Tata Group company will also add 30 Westside, and 10 Samoh stores this year, for a total investment of ₹800 crore, it said in its annual general meeting on Monday. The company also has Zara, Star Bazaar and Landmark stores in its fold.
“With Zudio picking up pace, and the opportunity size in value retail being much larger, we believe this new format would drive Trent‘s next leg of growth over the coming decade,” said Nuvama Institutional Equities.
At more than ₹10,000 crore, Trent’s revenues in FY23 from its portfolio of over 600 stores were at an all-time high, while EBIT margins improved to 7.7% in FY23 from 7.4% in FY22.
Shares of Trent are currently valued at about 74-83 times their FY24 earnings, and while this is at a significant premium to peers, analysts believe that the company’s rich valuations are justified given its strong growth potential and robust performance in the past.
Motilal Oswal Securities has a target price of ₹1,835 on the stock, implying an upside of 9% from the current levels. The brokerage has a ‘buy’ rating for the shares as it believes that the company’s robust expansion comes with a focus on profitability.
Nuvama Institutional Equities raised the target price for shares of Trent by 13% to ₹1,908, maintaining it as its ‘top pick’.