Trent Share Crash: First quarter results increased disappointment, this multibagger stock of Tata fell 10% in a single day

Trent Share Price Update: Shares of Tata Group’s retailer company Trent are seeing a decline of more than 10 percent in the early trading of the Indian stock market on Tuesday. The main reason for the weakness of the company’s stock is that the June quarter business update fell short of market expectations. Following the Q1 update, the brokerage commented cautiously on the continued growth in the store network despite continued growth.

The stock fell as much as 10.64% to Rs 2,987.90 in early trade after the company reported 19 per cent year-on-year rise in standalone revenue for the June quarter. While the growth reflects continued expansion of its Westside and Judeo formats, it was slightly below analyst expectations and store additions were also below expectations.

Brokerage’s opinion regarding Trent

Trent had reported standalone revenue of Rs 5,666 crore for the June quarter, up from Rs 4,781 crore a year ago. The company ended the quarter with 1,312 stores, including 301 Westside outlets, 982 Judio stores and 29 stores in other lifestyle formats. Overall, the brokerage said Trent’s June quarter update was slightly lower than expected, with revenue growth coming in below estimates and store additions slowing during what is typically the weakest quarter to grow the network.

While most analysts did not see the slow pace of store openings as a structural concern, some said the stock’s sharp rise in recent months left little room for disappointment.

Long-term growth is getting support

The market is divided on the stock’s short-term prospects. Bullish Analyst Trent Key long-term growth are supporting, citing the continued expansion of its Westside and Judio formats and the potential for further margin improvement. However, cautious analysts are citing decline in store productivity, increasing competition in the value-fashion segment and the possibility of store cannibalization as the main risks.

Trend strong in apparel retail sector

Despite the weak quarterly update, many brokerages consider Trent as one of the strong long-term players in India’s organized apparel retail sector, supported by its aggressive store expansion strategy and the consistent growth of its value-fashion chain Judio. Before the business update, HSBC had forecast revenue growth of about 21 percent for the quarter due to continued momentum at Westside and Judio. Bernstein identified Judio as well as the rapid expansion of the Westside format as a potential additional growth driver.

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March quarter net profit

Trent had reported a 26 per cent year-on-year rise in consolidated net profit for the March quarter, helped by good demand and the continued expansion of its retail network. The company remains one of the best-performing organized retailers in recent years, although investors are increasingly watching for signs of slowing growth as its store base expands.