Trent on path to expand presence beyond metros, revival in SSSG will be crucial
Trent reported the steepest decline in net profit for the March quarter since the Covid period on account of the continued expansion of Zudio stores and lower same-store sales growth (SSSG). Margins contracted due to higher discounts and a rising share of low-margin Zudio business in the revenue mix. The company's store additions remained robust. The back-ended expansion of Zudio is likely to support revenue growth in the coming quarters.
In addition, the company is expected to focus on new categories, including lab-grown diamonds and beauty products, which may keep the top line buoyant. Analysts have maintained a 'BUY' rating on the stock, projecting 25–26 per cent annual growth in revenue and net profit over FY25–27.
Trent's revenue grew by 29 per cent year-on-year but fell by 10 per cent in the fourth quarter of FY25 from the previous quarter, reflecting sequential weakness after the end of the festive season. Net profit slipped 47 per cent in the March 2025 quarter year-on-year and by 26 per cent sequentially amid sustained store expansion.
The company opened 13 Westside and 40 Zudio stores during the quarter. The company's effective cost management resulted in a decline in rent cost by 20 per cent year-on-year. Analysts stated that despite some pressure on gross margins due to Zudio's lower price positioning, the operating margin before depreciation and amortisation (EBITDA margin) is expected to remain stable at 16–17 per cent , supported by cost control.
For the fiscal year 2025, the company's revenue and net profit jumped 40 per cent and 10 per cent year-on-year to Rs16,668 crore and Rs1,584.8 crore, respectively. A lower profit growth was due to a higher base last year on account of an exceptional item of Rs 576 crore with respect to the gain on reassessment of lease estimates.
'Trent's expansion hinged on a focus on tier II-III cities. It added presence in 64 new cities and towns,' stated Elara Securities in a report. The brokerage expects 17 per cent and 8 per cent annual growth in store count for Zudio and Westside between FY25 and FY28. The combined retail area for Zudio and Westside stores increased by 40 per cent to 9.5 million square feet in FY25. The company earned 6 per cent revenue from the online sales channel.
Trent's SSSG has gradually moderated over the past two quarters reflecting slower demand. Motilal Oswal Financial Services mentioned in a report that Trent's SSSG slipped to a mid-single digit in March 2025 quarter from high-single digit in December 2024 quarter and double digit growth in September 2024 quarter.
Analysts expect growth in FY26 to be aided by Zudio's back-ended store additions. A recovery in SSSG would be a crucial ingredient. Despite short-term challenges, analysts remain upbeat on Trent's structural growth prospects. Motilal Oswal values Trent at Rs 6,900 per share, and Elara has maintained a target price of Rs 8,300 compared with Monday's closing price of Rs 5,374 on the BSE.
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