INSUBCONTINENT EXCLUSIVE:
The Tata Groups retail crown jewel is facing its most significant development truth check in years
Trent, which operates the popular Zudio and Westside chains, has seen its shares crash 35% from their peak amid growing issues over its
ability to sustain the blistering 35% CAGR income growth delivered over the previous five years.Fridays harsh 12% single-day plunge followed
a sharp downturn in the companys standalone earnings development in Q1, which fell to simply 20% a stark deceleration that has shaken
investor self-confidence in what was when viewed as an unstoppable retail juggernaut.The growth slowdown has triggered a painful
reassessment of Trents valuation and outlook
At its AGM, the business disappointed on near-term growth expectations in its core fashion industry, which is forecasted to provide around
20% growth in Q1FY26E, well listed below its FY2025 CAGR of 35%
While management declared their aspiration of 25%-plus development in the coming years, the existing run rate falls considerably except that
target.The deceleration has set off instant analyst downgrades, with Nuvama leading the charge by cutting the stock to HOLD from a formerly
Adjusting for the current run rate, we are cutting FY26E/27E income by -5%/ -6% and EBITDA by -9%/ -12%, Nuvama analysts wrote, slashing
their target cost to Rs 5,884 from Rs 6,627
The brokerages evaluation was blunt: Underwhelming near-term development triggers the downgrade to HOLD as the current appraisal is too
demanding.Live EventsAlso Read|Trent shares slide as Nuvama downgrades on slower growth outlook flagged at AGMHSBC, while maintaining a Buy
rating, cut its target cost for Trent to Rs 6,600 from Rs 6,700, citing weaker-than-expected Q1 performance
The worldwide brokerage noted that at the AGM, Trents chairman suggested Q1 profits exceeded Rs 50 billion, growing over 20% year-on-year,
well listed below the 34% growth predicted by Bloomberg consensus and HSBC.The soft demand environment and sourcing issues might have
impacted this below-consensus outcome, HSBC analysts stated, indicating provide chain disturbances from Bangladesh, which remains part of
Trents sourcing mix, despite over 90% of its items being made in India.This development deceleration comes at an important time for Trent,
once thought about among Indias most compelling retail success stories
The companys quick growth of its worth style chain Zudio had actually strongly caught market share, while Westside preserved constant growth
in the premium segment.Nuvama highlighted the near-term obstacles: Pickup in Zudio Beauty and the Star company can end up being the next
huge growth levers, however we believe these services require to stabilise before scaling up
Slowdown in growth requires our hand to downgrade Trent to HOLD.On the technical front, the picture has turned decidedly bearish
Anand James, Chief Market Strategist at Geojit Financial Services, noted the severity of Fridays decrease: A gap-down opening on Friday,
followed by extended slippage through the day, underscores the strength of bearish momentum
But the reality that weve now swung to 2 standard discrepancies from a five-month top in a single day possibly sets the phase for a pullback
in the coming week.James recognized support near Rs 5,111, warning that additional technical weak point might emerge.Meanwhile, Rajesh
Palviya provided a more constructive view for long-lasting financiers, identifying key assistance zones around Rs 5,0004,800
Looking at the strength of selling pressure in todays session, we might see more disadvantage towards Rs 5,2005,100
Rs 5,000 could act as a strong support location, he said.For those looking to purchase the dip, Palviya recommended perseverance: Investors
ought to wait for another 100200 point correction
When that plays out, one can seek to accumulate, as the long-term structure remains bullish.However, he warned about ongoing volatility: We
might see some consolidation or range-bound action in between Rs 5,000 and Rs 6,000 for the next couple of months, unless we see clear
revival signs from the management
His encouraged strategy: Buy on dips
Place a stop loss at around Rs 4,850 if getting in during the correction.The essential question for investors now is whether Trents
development slowdown is a temporary blip or a structural shift in Indias retail landscape
With the stocks lofty assessment constructed on expectations of continual high growth, the existing deceleration has exposed the threats of
paying premium multiples for growth.HSBC remains positive about the long-term outlook, noting the companys enthusiastic 2530% CAGR growth
target over the next 5 years
It also flagged the requirement for a steady macro environment and accessibility of excellent quality shop areas as vital to sustaining that
growth.As Trent browses this duration of heightened examination, investors will closely enjoy for signs of growth stabilisation and
managements ability to execute on brand-new levers like Zudio Beauty and the Star company
The stocks 35% decrease from its peak might make appraisals more attractive but the growth trajectory remains the definitive factor in
identifying whether this is a purchasing chance or a fundamental shift in the business potential customers.
