Trent shares surge nearly 5% after Elara initiates ‘Buy’ call, expecting 38% upside

Shares of Trent Limited, a Tata Group company, rose by nearly 5% in early trade on January 15 after Elara Capital initiated coverage on the stock with a ‘Buy’ rating. The brokerage set a target price of ₹8,500, indicating a potential upside of 38%.

Trent shares were trading at ₹6,438.95, up 4.51% or ₹277.80 from the previous close of ₹6,161.15. The stock’s intraday range was ₹6,164.70 to ₹6,519.00. With a market capitalization of ₹2.28 trillion, the stock is trading close to its 52-week high of ₹8,345. The average volume for the day stood at 769.60K shares.

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Trent Share Price history

Day Open Close Change %
Tue, Jan 14 2025
₹6,237.40
₹6,161.15
-1.02%
Mon, Jan 13 2025
₹6,462.65
₹6,224.40
-5.46%
Fri, Jan 10 2025
₹6,601.00
₹6,584.10
-0.57%
Thu, Jan 9 2025
₹6,719.00
₹6,621.70
-1.16%
Wed, Jan 8 2025
₹6,869.55
₹6,699.10
-2.55%
Tue, Jan 7 2025
₹7,010.20
₹6,874.30
-1.77%
Mon, Jan 6 2025
₹7,307.70
₹6,998.35
-4.23%
Fri, Jan 3 2025
₹7,350.00
₹7,307.70
-0.18%

Key Highlights:

  1. Zudio’s Leadership in Fast Fashion:
    • Zudio, one of Trent’s leading brands, is expected to maintain dominance in the fast fashion space.
    • The brand benefits from:
      • A successful private label strategy.
      • Differentiated fashion offerings driving robust traction.
      • A focus on product quality at reasonable price points, along with strong organic growth.
  2. Impressive Growth Projections:
    • The fast fashion segment, led by Zudio, is forecasted to grow at a CAGR of 31% through FY27E. By FY27E, fast fashion is expected to account for 14% of the apparel industry, up from 10% in FY24.
  3. Financial Outlook:
    • Elara anticipates Trent’s consolidated financials to grow at:
      • Revenue CAGR: 27%
      • EBITDA CAGR: 29%
      • Adjusted PAT CAGR: 38%
    • This is significantly higher than the 16% CAGR estimated for the overall apparel industry during FY24-28E.
  4. Valuation and Strategic Positioning:
    • The standalone business is valued at 57x EV/EBITDA (Sep ’27E).
    • Star Bazaar is valued at 4x EV/sales, while Zara and Massimo Dutti partnerships are pegged at 30x EV/EBITDA.
    • Trent’s unique store formats and strong brand recall give it an edge over competitors.

Disclaimer: This article is based on analysis and projections by Elara Capital and is for informational purposes only. It should not be considered as financial or investment advice. Always consult a financial expert before making investment decisions.