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Long runway for growth; Star store expansion to accelerate in FY27

The key message from Trent’s Chairman at the FY26 AGM was that the company remains in the early stages of its growth journey, with an estimated share of modest ~2% in India’s fashion and lifestyle retail market. Since outlining its ambition in 2023 to deliver 10x revenue and commensurate profitability growth, Trent remains ahead of the roadmap, achieving over 2.5x revenue and ~3x profit growth. The Chairman remains confident of opening 50 Westside stores, 200-250 Zudio stores, and 25-40 Star stores annually, with medium-to-longer term opportunity pegged at 700 Westside stores (vs. 300 currently) and ~5,000 Zudio stores (vs. ~960 currently). LFL growth was impacted by store densification and higher starting throughput of new stores. However, Trent continues to aspire for early double-digit LFL growth going forward. Further, the company will continue to incubate new formats (currently finetuning Samoh and Burnt Toast), expand emerging categories (such as footwear, innerwear, beauty, and lab-grown diamonds), and meaningfully diversify into international markets through Westside and Zudio over the medium term to achieve its stated ambitions. Reiterate BUY with an unchanged TP of INR3,500.

Long runway supported by a multi-format growth strategy

* Trent remains in the early stages of its growth journey, with an estimated share of modest ~2% in India’s fashion and lifestyle retail market. Since outlining its 10x ambition in 2023, revenue and profit have already increased by >2.5x and >3x, as execution remains ahead of the roadmap.

* The next phase of growth is expected to extend beyond Westside and Zudio, supported by the incubation of new formats (currently Samoh and Burnt Toast), category expansion, selective growth in international markets, and continued store additions across existing core retail formats.

* The Chairman has pegged the medium to longer-term opportunity at ~700 stores for Westside (vs. 300 currently) and ~5,000 stores for Zudio (vs. ~960 currently), while Star’s presence remains limited in the vast food and grocery category (~65% of India’s overall retail).

Westside: Rising customer relevance to drive 50 annual store additions

* Westside, Trent’s premium fashion format, currently operates 300 stores across 97 cities (added 52 net stores in FY26 and entered 11 new cities).

* The format continues to benefit from a differentiated 100% own-brand model, rapid merchandise refresh cycles, and over 80% domestic sourcing, supporting pricing power and product differentiation.

* The company continues to target ~50 annual store additions, and has pegged the long-term opportunity at ~700 stores, providing a substantial runway for disciplined network expansion.

* We conservatively build in ~35-40 annual net store additions over FY27-28

* Omnichannel remains complementary to store growth, with online volume growing 32% YoY in FY26 and e-commerce contribution rising to ~6% of revenue (which the Chairman pegged at INR3b), indicating ~INR50b revenue for the format.

Valuation and view

* After several quarters of growth deceleration, Trent witnessed growth recovery in 4QFY26. Our recent channel checks suggest that sales decline in cannibalized stores has eased, and LFL recovery is underway.

* However, Trent’s store productivity could still remain under pressure in FY27 as the stores added in tier 2+ markets typically have lower initial productivity and take a longer time to reach maturity levels (vs. metro and tier 1 markets).

* Despite relatively weaker growth, Trent continues to maintain strong cost controls to sustain healthy profitability in FY26. Going ahead, we believe margin expansion would largely be dependent on recovery in LFL growth.

* We continue to like Trent for its strong footprint additions, retail formats with robust store economics, long runway for growth in Star (presence in just 12 cities), and potential scale-up of emerging categories (Beauty, Innerwear and Footwear). However, continued revenue growth acceleration and the resulting earnings upgrades remain key to further re-rating.

* We build in a CAGR of 21%/19%/17% in consolidated revenue/pre-IND AS EBITDA/adj. PAT over FY26-28E.

* We reiterate BUY on Trent with an unchanged TP of INR3,500, premised on 45x FY28E EV/pre-IND AS EBITDA for the standalone (Westside and Zudio) business, 2.5x EV/sales for Star JV, and ~2x EV/EBITDA for Zara JV.

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