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On a Steady Runway of Growth; Maintain BUY

Est. Vs. Actual for Q1FY26: Revenue – INLINE; EBITDA – BEAT ; PAT – BEAT

Changes in Estimates post Q1FY26

FY26E/FY27E – Revenue: -2%/-3%; EBITDA: -5%/-7%; PAT: -6%/-9%

Recommendation Rationale

• Revenue Performance: Trent reported a 20% YoY revenue growth in Q1FY26 to Rs 4,781 Cr, broadly in line with estimates, despite macro headwinds like early monsoon onset and geopolitical disruptions. The fashion portfolio saw low single-digit like-for-like growth. Management highlighted that the revenue mix remains aligned with strategic priorities.

• Retail Footprint & Category Expansion: The retail footprint expanded to over 13 mn sq. ft., while emerging categories—beauty & personal care, innerwear, and footwear— continued to scale, contributing over 21% to revenues.

• Store Expansion: In Q1FY26, Trent added 1 Zudio store (net), taking the total store count to 766 for Zudio and 248 for Westside. The expansion strategy remains focused on deepening presence in metro and Tier 1 cities, while enhancing performance across key micro markets.

• Operating Efficiency and Margin Profile: Trent’s focused investments in technology and automation have supported stable operating economics and improved operating leverage. Gross margins for both Westside and Zudio remain steady, reflecting the strength of Trent’s sourcing strategy, pricing architecture, distribution model, and disciplined inventory management.

Sector Outlook: Positive

Company Outlook & Guidance: Given the near-term challenges, we revise our FY26/FY27 estimates downward. However, we maintain our BUY rating, supported by a strong long-term growth outlook and structural strengths in the business.

Current Valuation: SOTP

Current TP: Rs 6,160/share (Previous TP: Rs 6,650/share).

Recommendation: With a 15% upside potential from the CMP, we maintain our BUY rating on the stock.

Financial Performance

The company’s revenue grew ~20% YoY to Rs 4,781 Cr, while its fashion concept registered low single-digit LFL growth in Q1FY26. EBITDA increased by 37.2% YoY, while EBITDA margins improved by 223bps YoY to 17.5% due to store optimisation. PAT stood at Rs 423 Cr, up by 23.5% YoY.

Outlook Trent continues to post robust revenue growth despite macro headwinds. The recent correction in stock price enhances the risk-reward profile, offering an attractive entry point for long-term investors. With structural tailwinds in organised retail and significant headroom for market share gains, Trent is well-placed to capitalise on the sector’s multi-year growth opportunity. We remain constructive on Trent’s long-term outlook, supported by continued outperformance in sales, rapid store expansion, and dynamic product assortments driving higher footfalls. Margin improvement across formats, along with the successful application of Trent’s private-label-led strategy to Star, reinforces earnings visibility. New growth avenues, including UAE expansion, Zudio Beauty, and entry into the LGD jewellery segment, are expected to further strengthen the growth trajectory.

Valuation & Recommendation

We remain positive on the company and expect Revenue/EBITDA growth of 28%/28% CAGR on a standalone business over FY24-27E. We maintain our BUY rating on the stock and value the company on an SOTP basis with a revised TP of Rs 6,160/ share. Our TP implies an upside of 15% from the CMP.

Key Risks to Our Estimates and TP

• Increase in competitive intensity, weakening of the demand environment.

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