Tata Group stock! BofA turns bullish on Trent, initiates coverage with Buy, pegs 17% upside

Global brokerage firm BofA Securities has initiated coverage on Tata Group’s Trent with a Buy rating and a price objective of Rs 3,075 per share, citing the company’s differentiated retail platform, strong growth prospects and integrated technology and supply-chain capabilities.

Trent shares ended at Rs 2,622.50 on the NSE on Wednesday, down 0.47% from the previous close of Rs 2,635. The stock has traded in a range of Rs 2,619.30–Rs 2,669.90 during the session.

Aditya Mathur and Pritesh Sonar, research analysts at BofA, said Trent has built a differentiated retail platform spanning apparel, fashion, beauty, food and grocery, and emerging consumer lifestyle concepts.


“Trent has built a differentiated portfolio across apparel, fashion, beauty, food & grocery, and emerging consumer lifestyle concepts,” the analysts said.

The brokerage highlighted Zudio and Westside as the key fashion businesses, while Star is Trent’s private-label-focused general retailing format. Other formats, including Samoh and Burnt Toast, are relatively new, according to the report.

BofA Securities said Trent’s key differentiation comes from its direct-to-consumer model and end-to-end control over brands, products, sourcing, pricing, inventory and stores, supported by an integrated technology and supply-chain backbone.

“While consumer-facing propositions remain differentiated across formats, shared backend capabilities can provide substantial operating leverage,” the analysts said.

Growth outlook

BofA Securities said Trent remains a high-growth retailer operating in India’s large and still-unorganised fashion market. The brokerage noted that the company has only around 2% share of India’s fashion retail market, leaving room for further share gains and category formalisation.

The analysts said market expectations for Trent have normalised following earnings and growth estimate cuts as well as a share-price pullback over the past two years.

“We see steady 20%/24%/19% revenue/EBITDA/EPS CAGR over FY26-29E,” the brokerage said.

BofA Securities also said Trent’s direct-to-consumer, own-brand model, backed by technology and supply-chain capabilities, sets it apart.

Near-term outlook

The brokerage expects the near-term demand environment to remain fairly stable, with steady growth trends over the next few quarters. However, it identified rising inflationary pressure on consumer wallets as a key factor to watch.

“There could be slight margin pressures over the next 2-3 quarters due to input cost inflation,” the analysts said, adding that the first quarter of FY27 benefited from low-cost pipeline inventory.

The brokerage nevertheless expects Trent to maintain profitability for the full year through cost and productivity initiatives.

Over the next three years, BofA Securities forecasts Trent’s revenue, EBITDA and recurring PAT to grow at CAGRs of 20%, 24% and 19%, respectively.

Zudio growth, Westside expansion

BofA Securities said Zudio has been a primary growth driver for Trent and believes concerns around competition, cannibalisation and slower growth may have been overstated.

According to the brokerage, the recent moderation in Zudio’s like-for-like growth has come against an unusually high base and appears linked to cluster-based expansion and deeper penetration into smaller cities rather than structural weakness.

“We expect trends to stabilize hereon,” the analysts said.

The brokerage also said Westside is entering a renewed expansion phase, while newer concepts provide long-term optionality.

Following revenue and EPS estimate resets and a correction in Trent’s share price over the past two years, BofA Securities said expectations and valuations have moved to more normative levels.

Execution remains key differentiator

The brokerage said Trent’s differentiation lies less in any individual retail format and more in its operating model.

“The company controls brands, product development, sourcing, pricing, inventory and store execution via an integrated, technology-enabled platform,” the analysts said.

BofA Securities said competitors can replicate visible elements such as price points, assortment and store layouts, but replicating the underlying execution engine is harder.

“Merchandise refresh, supply-chain agility and inventory discipline support rapid scaling with attractive economics,” the brokerage said.

The key monitorables and risks, according to the BofA Securities include the macro and demand environment, cost pressures, competitive intensity, cluster economics and traction in new initiatives.

Disclosure: This article has been written by Kumar Gaurav, who is not a SEBI-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here