Please refer to important disclosures at the end of this report
Promoted by the Tata group, Trent operates Westside, one of India's largest
and fastest growing chains of departmental stores. With steady same store
sales growth (8%) and aggressive store addition (added 18 stores, the
highest store addition historically in a single year), revenues from the
Westside format grew robustly. Healthy store addition coupled with steady
SSSG is expected to drive revenues, going forward .Zara maintained its
robust revenue trajectory despite no new store addition (net basis). The
management intends to steadily expand the presence of Zara stores over the
next three to four years, primarily in major cities (currently operates 20
stores)In search of the right format for Star Bazaar, management believes the
Star Market format (5000-15000 sq ft) is more sustainable. Rightsizing of
store model, along with enhanced private label share would improve the
profitability, going forward. Zudio addresses the fast and edgy fashion needs
of customers at sharper price points, with infrastructure and backend
processes closely aligned with Westside, which enables it to drive better
efficiencies. The company sees value fashion as one of the growth drivers in
the medium to long term and intends to scale up the brand significantly in
the coming years. Accelerated store expansion in Westside format with
calibrated store expansion in other formats like Zudio, Zara and Star market
would provide impetus to revenue growth, going ahead. Also, a change in
strategy to focus on medium format stores (5000-10000 sq ft) under Star
banner and improvement in Zara margins would provide an additional delta
in profitability for Trent. Trent has maintained consistent profit growth of 67%
over 5 years and has been maintaining a healthy dividend payout of
40%.Hence BUY.
CMP `750
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Reuters Code
Jaikishan Parmar
022 3935 7600 Ext: 6810
Trent Ltd
Feb 17, 2020
Trent Ltd|Retail
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Disclosure of Interest Statement Trent
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)