Store expansion, strong Q1 numbers enhance growth outlook of pricey Trent

Top line to get a boost; margins may face pressure in near term

Investors’ willingness to give a high valuation to Trent’s stock underlines the growth potential associated with the company. It is currently trading at 34 times its FY21 estimated enterprise value (EV) to Ebitda (earnings before interest, tax, depreciation and amortisation) — which is a 27 per cent premium to its historical long-term 1-year forward average valuation. 
 
It is also higher than the valuations of many peers such as Aditya Birla Fashion and Retail, V-Mart Retail, Future Retail, and Page Industries, which are trading at up to 25 times their EV/Ebitda ratio.
 
Trent operates apparel, grocery and entertainment retail