IGI Logo

Strong growth momentum continues

Strong footprint addition and healthy LTL growth across both segments Westside and Zudio ed to a strong revenue growth of 2.2x from preCOVID levels. However, a lower gross margin and incremental cost on the back of store expansion, resulted in a 300bp contraction in EBITDA margin to 18.4% from pre-COVID levels. ? Aggressive store addition and robust LTL growth across both Westside and Zudio will continue to drive growth. We expect a consolidated revenue/ EBITDA CAGR of 46%/67% over FY22-24. Our EBITDA/PAT estimate remains unchanged, despite a revenue upgrade, which is offset against a lower margin. We retain our Buy rating, given the strong growth opportunity for TRENT.

EBITDA up 85% from pre-COVID levels (8% miss) on strong revenue recovery, but margin misses our estimate

* Standalone revenue grew ~2.2x from pre-COVID levels (5% miss, up 3 9.5% QoQ) on the back of a strong footprint addition and LTL growth.

* Revenue from Westside stood at INR10.4b (as per our working), up over 50% from pre-COVID levels. This was led by a strong LFL growth of 24% from 1QFY20 levels and store additions of 31%. Revenue for Zudio (as per our working) stood ~INR6b v/s a mere INR471m in 1QFY20. This implies an LTL growth of 129% and 4x growth in the number of stores as compared to 1QFY20 levels, which is far above its peers.

* Gross profit grew 100% from pre-COVID levels to INR8.2b. However, margin contracted by 370bp to 49.3%.

* EBITDA stood at INR3b, up 85% from pre-COVID levels (8% miss), on the back of a strong revenue recovery, but was partly offset by lower GM and higher employee and other operating costs. Pre-Ind AS EBITDA (as per our working) stood ~INR1.7b, with a margin of 10%. This is, however, lower by 240bp as compared to its margin in 1QFY20.

* Consequently, net profit stood at INR1.03b, up 77% from pre-COVID levels.

Highlights from the management commentary

* Online revenue through Westside.com, Tata CLiQ and Tata Neu constituted ~6% of Westside revenue, i.e. a revenue of ~INR600m, registering a YoY growth of 129% in 1QFY23.

* Emerging categories (Beauty and Personal Care, Innerwear, and Footwear) now constitute over 15% of standalone revenue.

* The Star business, with tight footprint stores, sharp pricing, and a focus on its fresh and own brand offerings is witnessing improved customer traction, with growing sales densities. The management expects this to emerge a key and additional growth engine in its portfolio going forward.

To Read Complete Report & Disclaimer Click Here

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html SEBI Registration number is INH000000412

Above views are of the author and not of the website kindly read disclaimer