Sell Trent, target price Rs 800: HDFC Securities

HDFC Securities has sell call on Trent with a target price of Rs 800. The current market price of Trent Ltd. is Rs 1030.55. Time period given by analyst is one year when Trent Ltd. price can reach defined target.

Trent Ltd., incorporated in the year 1952, is a Large Cap company (having a market cap of Rs 36437.46 Crore) operating in Retail sector.

Trent Ltd. key Products/Revenue Segments include Readymade Garments, Other Operating Revenue and Rent for the year ending 31-Mar-2022.



Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 1372.97 Crore, down -10.26 % from last quarter Total Income of Rs 1529.95 Crore and up 41.11 % from last year same quarter Total Income of Rs 972.99 Crore. Company reported net profit after tax of Rs -11.26 Crore in latest quarter.

Investment Rationale
Trent reported strong Q4 print. Standalone revenue grew 53% YoY to INR11.85.bn. FY19-22 revenue CAGR stood at 15%. Store addition (125 stores) has picked up meaningfully, ensuring a healthy SSSG runway in near-to medium term. Profitability was (EBITDAM: 12.9%; down 480bps, in-line) impacted by (1) normalisation of rental bills and (2) lower realised product margins (courtesy lower full-price sales). FY24 EBITDA estimate remains largely unchanged. The brokerage retains SELL recommendation with an SOTP TP of INR 800/sh (unchanged), implying 30x FY24 EV/EBITDA.


Promoter/FII Holdings
Promoters held 37.01 per cent stake in the company as of 31-Mar-2022, while FIIs owned 28.32 per cent, DIIs 13.43 per cent.