Corporate Grapevine     

Published: August 31, 2024
Updated: August 31, 2024

Different strokes for Trent, Tata Neu

Trent Ltd, a company run by Noel Tata, is creating history as its shares touch a new high. Tata Trent also has a significant presence in the mass brand apparel through Westside.

Under Tata’s tutelage, Trent continues to report strong performance despite weak consumption reported by other retailers. Standalone revenue grew 57% YoY in the June quarter of FY25 (5-year CAGR of 40%), aided by the store expansion of Zudio (+44% YoY) and double-digit SSSG in fashion concepts. This, along with gross margin improvement (170 bp) and operating leverage, led to 67%/2.3x YoY growth in EBITDA/ PAT (16%/12% beat). The Star format also reported strong same-store sales growth of 22% with six store additions.

Analysts say based on strong revenue productivity, aggressive store additions, margin tailwinds from moderating margins, and operating leverage, they estimate a CAGR of 41%/52% in revenue/PAT over FY24-26. The continued momentum in Star and improving store metrics offer further upside potential

Incidentally, while Trent is performing well, some of Tata group’s new businesses, including Tata Neu, a super app, are not showing any signs of improvement.