Informist, Tuesday, Aug. 5, 2025

By Avishek Rakshit

KOLKATA – Higher sales volume, especially from its affordable readymade fashion garment outlet brand Zudio, is expected to boost Trent Ltd.'s financials in the June quarter. However, more sales of lower-value items from this brand of stores compared to Westside stores are expected to compress the company's margins.

The Tata group company is expected to report a 10.5% on-year increase in its net profit for the June quarter to INR 3.8 billion and revenue is expected to increase 23.3% to INR 49.2 billion, according to the average of estimates from seven brokerages. On a trailing basis, the revenue is expected to increase nearly 20% and the net profit is expected to rise a little over 8%.

In a notice to bourses on Jul. 4, Trent had declared that its revenue in Apr-Jun increased 20% on year to INR 50.61 billion. As of Jun. 30, the company's store portfolio included 248 Westside branded stores, 766 Zudio branded stores, and 29 stores across other lifestyle concepts. The fashion retailer will detail its financial results for the June quarter on Wednesday.

Kotak Institutional Equities is the most bullish on the company and gave the highest net profit and revenue estimates for the June quarter at INR 5.1 billion and INR 54.3 billion, respectively. Nuvama Wealth Management Ltd. has the lowest estimate of net profit at INR 2.9 billion and Sharekhan Ltd. has the lowest estimate of revenue at INR 47.9 billion. Incidentally, Antique Stock Broking Ltd., Dolat Capital Market Pvt. Ltd., and Motilal Oswal Financial Services Ltd. have the exact same revenue estimate, which is just marginally higher than the lowest revenue estimate of INR 47.9 billion.

Trent reported a net profit of INR 3.4 billion in the year-ago quarter and INR 3.5 billion in the March quarter. It reported a revenue of INR 39.9 billion in Apr-Jun of 2024-25 (Apr-Mar) and INR 41.1 in the March quarter.

Based on Trent's declaration of its June quarter revenue to the exchanges, HDFC Securities Ltd. said that it estimates revenue from the Westside stores, which are positioned in the premium fashion retail segment, to have risen 15.5% on year and sales from Zudio stores to have risen 23%.

However, Nuvama is of the view that sales on a like-for-like basis is likely to have declined 4% on year. Nuvama said the decline is on account of Trent's business strategy, which resulted in cannibalisation from newly opened stores near high-performing locations. Demand slowdown, geopolitical headwinds, and the natural impact of a high comparative base added to the decline, Nuvama said.

Like-for-like comparison is the most important metric in the retail industry, and compares sales between the same stores over time. Kotak is also of the view that sales per square feet could have declined 5.7% on year.

Growth in the company's total store count is nearly flat on year but is expected to have increased on a trailing basis after the company rationalised and opened new stores for a wider geographical reach aimed at increasing its market share and profit. Nuvama said Trent's latest business performance update indicated that the total store count under the Westside brand has remained constant on a year-on-year basis at 248, and only one store was added in the Zudio portfolio on a year-on-year basis, taking the total store count under this brand to 766. Kotak said on a trailing basis, Trent opened five new stores under the Westside brand and 20 new stores under the Zudio brand.

All brokerages are of the view that Trent's gross margins are expected to have taken a hit in the June quarter. Nuvama said Trent is likely to report softness in margins on account of the company's drive to capture market share and due to increasing competition.

Nuvama expects the Tata group company to report a gross margin of around 45.4% in the June quarter, compared to 46.2% in the year-ago quarter. The earnings before interest, tax, depreciation, and amortisation margins are expected to fall to 11.7% as against 15.3% in the June quarter of FY25.

Kotak said gross margins are expected to decline by 40 basis points on year on account of a higher mix of revenues from Zudio stores which sells affordable fashion, and the strong revenue growth coupled with fixed cost operating leverage will drive EBITDA growth of 53% on year.

Trent is expected to report an EBITDA of INR 7.4 billion, according to the average of estimates from six brokerages. The highest EBITDA estimate of INR 9.4 billion is from Kotak and the lowest of INR 5.6 billion is from Nuvama.

At 1525 IST, shares of Trent traded at INR 5,319.50, up 1.34% on the National Stock Exchange. The shares are down nearly 1.5% since the company announced its March quarter earnings on Apr. 29.

Of the 11 research reports on the company available with Informist, seven have a 'buy' rating on the stock at an average target price of INR 6,832. Two brokerages each have a 'hold' and 'sell' rating on the scrip.

Following are the Apr-Jun earnings estimates for Trent Ltd., based on reports from seven brokerages in descending order of the estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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