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In-line performance

Trent’s (TRENT IN) Q3 show was in line and healthy, given median sales growth of 29.8% YoY for peers. Store addition was in-line for Zudio/Westside and EBITDA margin improved led by optimized occupancy cost. Despite a higher base, TRENT continued to offer high growth than peers. We largely maintain our estimates and retain BUY but with pared SoTP-TP of INR 8,300.

Robust standalone performance despite high base: TRENT’s standalone revenue (INR 45.3bn) grew a healthy 36.9% YoY despite a high base of last year. This was led by store additions but with moderated high-single-digit LFL (due to higher base). TRENT continues to be selective while entering new geographies/micro markets. It is also optimizing its current network by consolidating stores. Through 9MFY25, Westside’s net store addition was at six (added 12 in Q3), with store consolidation in Q1/Q2. This took the store count to 238. Zudio added 58 stores in Q3 (90 in 9MFY25), taking the total count to 635. Expect ~140 stores additions for Zudio each in FY26E/27E/28E. For Westside, we cut store addition estimate to 22 each for FY26E/27E/28E. The share of emerging categories – Beauty and Personal Care, Innerwear etc. – was steady at 20% of standalone revenue. Online share formed 6% of Westside revenue, up 45% YoY in 9MFY25, with healthy jump in club members to 14mn (up 55.6% YoY and 40.0% QoQ).

Profitability up QoQ despite store optimization: Standalone gross margin improved 51bps QoQ (down 124bps YoY owing to a high base). Standalone EBITDA margin was at 18.5% (+260bps QoQ), led by optimized occupancy cost (8.6% in Q3; ~10% in Q2) and employee cost. Optimization in occupancy cost is likely led by rationalization and consolidation of store network, which shall aid margin. We expect Zudio’s salience (low gross margin) to improve and expect standalone EBITDA margin in a narrow band of 16.0-16.5% in FY24-28E. Higher inventory turns and improved gross margin are key levers for EBITDA margin.

Star Baazar – LFL at 10.0%: The store count for Star Baazar (SB) was steady at 74, with retail area at 1.2mn sqft. So, we cut our store addition estimate to 10 for FY25E. SB’s LFL came in at 10.0% YoY, higher than 8.3% YoY for DMart. The share of GMA continued to increase, at 35% in Q3 from 32% in Q2. Pick-up in own brand share will be key to improve profitability, which reduced to 69% in Q3 from 73% in Q2.

Maintain BUY; TP pared to INR 8,300: Q3 was in-line and healthy, given median sales growth of 29.8% YoY for peers (VMart, V2Retail, Style Baazar, Vishal Megamart). Zudio continued to differentiate itself in fast fashion as competition is yet to grasp the segmental know-how. Our revenue estimates remain broadly similar (+2.3/1.9% for FY27E/28E). We modestly raise EPS estimates by 3.1/2.9% for FY27E/x28E, factoring in margin performance. Retain BUY but with pared TP of INR 8,300 (from INR 8500), as we pare standalone business multiple to 55x (from 57x) Sep ’27E EV/EBITDA due to moderated LFL growth in the fashion portfolio, Star Baazar at 4x EV/sales and Zara+ Massimo Dutti at 30x EV/EBITDA

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