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Nuvama downgrades Trent to 'Hold' on slower growth outlook; slashes target
The downgrade comes after Trent 's AGM, where the company indicated that its fashion segment is expected to grow about 20 per cent in Q1FY26E, considerably lower than its five-year compound annual growth rate (CAGR) of 35 per cent over FY20-25.
While the management reiterated its long-term ambition of achieving 25 per cent-plus growth over the next few years, Nuvama noted, 'The current run rate falls short of it,' prompting the brokerage to revise its FY26E/27E revenue estimates lower by 5–6 per cent and Ebitda projections by 9–12 per cent.
Despite the near-term disappointment, management maintained an optimistic tone on the company's long-term prospects.
At the AGM, it reaffirmed its vision to scale revenue 10x, noting that revenue has already doubled since this goal was set in FY23. This growth, according to the company, will be driven by robust expansion plans, including the addition of around 250 stores across formats in FY26.
Nuvama acknowledged this ambition, saying, 'We remain confident of management beating this given the execution track record,' but added that this will take time to reflect meaningfully in financials.
The brokerage also pointed to the potential of newer verticals like Zudio Beauty and Star Bazaar as future growth drivers.
On Star Bazaar, Nuvama highlighted the management's bullish stance, which included commentary that it could eventually become a bigger business than Westside and Zudio, given the size of the food retail market.
Besides, the company clarified there are no plans to merge Star Bazaar with Big Basket, positioning them differently in terms of product mix and pricing.
However, near-term headwinds remain the core concern. Nuvama noted, 'Underwhelming near-term growth prompts the downgrade to 'Hold' as the current valuation is too demanding.' The revised target price stood at ₹5,884, down from the earlier ₹6,627.
While a major pickup in Zudio Beauty or the Star business could serve as upside risks to its view, the brokerage believes these ventures need to stabilise before they can be scaled sustainably.
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