11 Feb , 2022 By : Kanchan Joshi
Tata Group's retail arm Trent, headed by Noel Tata, reported a 79% jump in standalone net profit to Rs199 crore on a revenue growth of 85% year-on-year (YoY), as westside registered SSSG of 49% YoY and 9% over pre-Covid level. Trent shares were trading about 0.2% higher at Rs1,078 apiece on the BSE in Friday's session.
Trent’s Q3FY22 revenue was ahead of its estimates, while EBITDA was in line with ICICI Securities' expectations. Trent expects to exit FY22 with combined stores (Westside Zudio) of more than 425, implying healthy store addition in Q4FY22 as well.
“We maintain BUY with a revised DCF-based target price of Rs1,250 per share (earlier: Rs1,230), given the company’s strong track record of execution," the note stated. Though, the brokerage sees extended lockdowns and lower discretionary spends as key risks.
Trent Chairman Noel N Tata attributed the strong numbers to the rising consumer sentiment on the back of the rising vaccination, further relaxation in pandemic-related curbs and the festive season.
The company's management believes that its Star Bazaar grocery business model of tight footprint stores, sharp pricing, focus on fresh/own brands etc is witnessing resilient customer traction and encouraging. Hence, management will evolve its properties on the basis of this model.
Analysts at PhillipCapital have have increased revenues/EBITDA for FY22/23 by 6%/9.4% and 3.4%/10.6% respectively factoring higher than expected store opening and strong recovery.
“We maintain our rating at BUY with an SoTP-based target price of Rs1,298 (earlier Rs1,207 apiece). Trent will continue to deliver industry leading revenue/EBITDA CAGR of 20%/23% over FY20-24e with best in class working capital. Further upside could emerge from turnaround of grocery vertical in medium term," they said in a note.
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