Trent hits record high on strong June quarter earnings; stock zooms 13%

Overall, the operating earnings before interest and tax (EBIT) margin improved to 10.6 per cent for Q1FY25 against 7.8 per cent for Q1FY24.

Shares of Trent hit a record high of Rs 6,375, surging 13 per cent on the BSE in Friday’s intra-day trade amid heavy volumes after the company reported 133 per cent year-on-year (YoY) jumped in its standalone profit before tax (PBT) at Rs 450 crore in June 2024 quarter (Q1FY25). The company had posted PBT of Rs 193 crore in a year ago quarter (Q1FY24).

The stock of Tata Group has surpassed its previous high of Rs 5,916.55 touched on July 31, 2024. It is trading higher for the third straight day, soaring 22 per cent during the period.

At 02:04 PM, Trent was trading 11 per cent higher at Rs 6,254.85, as compared to 1.04 per cent rise in the BSE Sensex. The average trading volumes on the counter rose over three-fold, with a combined 4.7 million equity shares changed hands on the NSE and BSE.

 

Trent is part of the Tata Group and operates a portfolio of retail concepts. The primary customer propositions of Trent include Westside, Zudio, a one stop destination for great fashion at great value and Trent Hypermarket, which operates in the competitive food, grocery and daily needs segment under the Star banner.

The company’s standalone revenue grew 56 per cent year-on-year (YoY) at Rs 4,228 crore, as against Rs 2,704 crore a year ago. It reported 39 per cent compound annual growth rate (CAGR) on revenue and PBT over Q1FY20. Overall, the operating earnings before interest and tax (EBIT) margin improved to 10.6 per cent for Q1FY25, from 7.8 per cent for Q1FY24.

The consolidated PBT of the company jumped 136 per cent Y-o-Y at Rs 501 crore, on back of 55 per cent Y-o-Y increase in revenues at Rs 4,354 crore.

As of June 30, 2024, Trent’s store portfolio included 228 Westside, 559 Zudio and 36 stores across other lifestyle concepts. During the quarter, the company opened 6 Westside and 16 Zudio stores across 12 cities.

The management said the company continues to witness encouraging traction for its lifestyle offerings across brands, concepts, categories and channels. Several new stores were added in Q1 and the management expects a steady expansion of portfolio going forward. The success of own branded products also augurs well for the Star business. The management is confident that this business is well-positioned to shift gears and deliver substantial value to customers and shareholders.

Star, the supermarket concept, offers a curated assortment of products including FMCG, staples and a comprehensive fresh offering (vegetables, fruits, dairy & non-vegetarian products).

Star’s product portfolio is complemented by a compelling range of exclusive own branded FMCG (Fabsta, Klia, Skye, Star), general merchandise (Smartle), and apparel (Zudio) products at attractive prices.

Star business registered operating revenue growth of 29 per cent Y-o-Y in Q1FY25 with LFL growth of over 20 per cent. The business continued to witness all-round improved operating performance, driven by the company’s own brands, staples, fresh & general merchandise offerings which now contribute to over 70 per cent of revenues.

Trent has been posting consistent strong performance in the retail universe by delivering double-digit same-store-sales growth in a weak discretionary environment. Innovation in product portfolio, 100 per cent contribution from own brands, aggressive store expansions, scaling up of the Star business and leveraging on digital presence will be key growth drivers in the medium term, according to analysts.

Further, Trent is seeing strong pick-up in new initiatives/ categories through increased contribution from online sales and emerging categories. An accelerated store expansion programme, increased contribution from the online channel, and a pick-up in foods business will augur well in the near term, the brokerage firm Sharekhan said in recent note.