Trent shares fall 3.5% despite Q1 beat as analysts diverge on growth outlook

Shares of Trent Ltd closed sharply lower on Friday, ending the session at ₹2,997 on the NSE, down 3.54 oer cent or ₹110.10 from Thursday’s close of ₹3,107.10. The stock touched a low of ₹2,985.60 intraday before recovering marginally. Total traded value for the day stood at ₹745.66 crore, with 24.69 lakh shares changing hands.

The stock’s decline came a day after Trent posted Q1FY27 standalone results that beat analyst estimates on most metrics. Revenue rose 18.5 per cent year-on-year to ₹5,666 crore, EBITDA surged 33 per cent to ₹847 crore with margins expanding 208 basis points to 19.6 per cent, and PAT grew 26 per cent to ₹532 crore. Gross margins came in at 46.6 per cent, up 149 basis points year-on-year, surprising most brokerages on the upside.

Analyst reactions were broadly positive but divided on valuation. Morgan Stanley maintained Overweight and raised its target to ₹3,406. Motilal Oswal and Axis Direct both reiterated Buy with targets of ₹3,775 and ₹3,640 respectively, citing strong margin execution and store expansion. Macquarie (Outperform, ₹3,600) and Bernstein (Outperform, ₹3,500) also saw Q1 as a beat, with Macquarie attributing the gross margin strength to a rising share of Westside, which carries higher margins.

However, not all brokerages were bullish. Jefferies maintained Hold with a revised target of ₹3,435, noting that like-for-like growth remained muted in the low single digits, partly due to store densification. Citi held its Sell rating with a target of ₹2,950, arguing that while margins have surprised, an acceleration in revenue growth is needed to justify current valuation multiples. The stock’s trailing PE on NSE stood at 91.3 at close.

On store additions, Trent opened one Westside and 22 Zudio stores in Q1FY27, taking its network to 301 Westside and 982 Zudio outlets. Over 80 per cent of new Zudio stores were in Tier-II and III cities. Management flagged near-term input cost pressures from raw material inflation and geopolitical uncertainty in West Asia, but said value chain interventions and supplier engagement would help absorb the impact.

The stock has lost nearly 15 per cent over the past year but remains up about 4.6 per cent year-to-date, against a roughly 6 per cent decline in the Nifty 50. Its 52-week range spans ₹2,184 to ₹3,783.

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