Trent shares plunged more than 11% on Friday-the biggest single day slump since April 7-after the management tempered Q1 growth expectations that prompted investors to book profits.The company said in an update that it expects revenue growth of 20% for the first quarter which analysts said was significantly lower than its earlier forecast.
This led to the shares nosediving almost 14% during the day.
The stock closed at 5,456, down 11.8%.Analysts said that further declines of 4-5% are likely from current levels, and investors should stay away from the stock until clarity on the growth trajectory emerges from the company's upcoming earnings."During May and June the management gave an aspirational growth target of 25% over a longer term that the Street has been factoring in and during the business update the standalone revenue growth was 20%," said Hemang Jani, director at Finazenn, an investment advisory.ETMarkets.comLive EventsWhen a credible company that commands a higher PE multiple reduces growth estimates it warrants a reaction from the stock price which was seen today with Trent, he said."Post the initial reaction witnessed today, Trent shares can see a further drop of around 4% to 5% in the near term and investors should stay cautious on the stock until clarity on growth trajectory and visibility of earnings becomes clear," said Jani.Trent witnessed a stellar run in the past few years, soaring 785.7% in the past five years and emerged as the top Nifty performer in 2024; gaining 133.2%.
Benchmark Nifty jumped 140% and 8.8% in the respective periods.However, shares of the Tata Group company tumbled 22.4% so far this year, while the benchmark Nifty gained 7.3% in the same period.Brokerage Nuvama downgraded Trent to 'hold' and slashed the target price to 5,884 from 6,627 on account of growth slowdown.
"During their commentary, management mentioned the growth trajectory for Q1FY26, which seems to be underwhelming given the high expectations based on the past track record of growth (~35% CAGR over FY20-25)," said analysts at Nuvama in a note.The current run rate even falls short of management's aspiration of 25% growth for the next few years that led to re-evaluation of the growth targets, the firm said.Jani said that it remains to be seen whether the lower growth is relegated to this quarter or extends beyond that and cues can be taken from the company's earnings.