Sharekhan has given Buy recommendation for Trent with a target price of Rs. 1018 in its research report issued on Jul 05, 2021
Sharekhan’s research report on Trent
Like its peers, COVID-19 disrupted Trent’s financials as well in FY2021. However, the company focused on – 1) sustained store additions (added 71 stores) and 2) reduction in operating costs (employee and rental costs fell by 18.6% and 11%, respectively). Its value brand Zudio posted strong numbers with a revenue of Rs. 480 crore as like-for-like sales recovered to pre-COVID levels. Hypermarket subsidiary and association with Zara saw operating losses shrink led by cost-saving initiatives. Working capital cycle reduced by 17 days; operating cash flow stood at Rs. 413 crore. The company ended FY2021 with strong liquidity position of Rs. 700 crore, which will address future store expansions.
We retain a Buy on Trent with a revised price target of Rs. 1,018. Strong liquidity position, sustained store additions and a differentiated business model make it a strong investment bet in the branded retail space.