High growth and margin expectations likely to drive Trent's stock

Sharp decline in interest costs (lease-related) and higher income from associates (including Zara) helped growth in net profit, which was ahead of estimates

Tata group company Trent had a strong Q4FY24, delivering 53 per cent year –on-year (Y-o-Y) revenue growth (standalone) and 125 per cent Y-o-Y operating profit growth in Q4FY24. Gross margin expanded 449 basis points (bps) Y-o-Y, driving the beat of consensus. There was an acceleration of Zudio store additions, as well as outperformance versus its peers. The margin expansion was backed by better return on invested capital (RoIC).

Sequentially, gross margin contracted by 66 bps compared to Q3FY24. The company added five Westside stores and 85 Zudio stores, with a footprint across 91 cities (Westside) and 169 cities (Zudio). Trent