Trent Q1 earnings preview: Robust topline growth up to 36% YoY seen on store additions. Brokerages divided on PAT growth
ADVERTISEMENT While topline may rise up to 36% YoY, EBITDA margin is likely to contract due to soft same-store sales growth (SSSG), cost inflation, and competitive pressures.
As a result, the company's net profit is likely to take a hit, say brokerages who are evenly divided on this metric. Out of the four estimates considered, two indicate a profit after tax (PAT) decline while others see a low single-digit growth.
The estimates of PhillipCapital (PC), Nuvama Institutional Equities, Motilal Oswal Financial Services (MOFSL) and Kotak Institutional Equities have been considered.Here's what their estimates are on these 4 metrics:
– PhillipCapital: Rs 351 crore, up 3% YoY and flat QoQ
ADVERTISEMENT – Nuvama sees core PAT at Rs 288 crore, down 16% YoY and down 18% QoQ– MOFSL: Rs 356 crore, up 4.1% YoY
ADVERTISEMENT – Kotak Equities: Rs 509 crore, up 48.7% YoY and up 45.4% QoQ– PhillipCapital: Rs 4,788 crore, up 20% YoY and up 17% QoQ
ADVERTISEMENT – Nuvama: Rs 5,061 crore, up 20% YoY and 17% QoQ– MOFSL: Rs 4,790 crore, up 20% YoY– Kotak Equities: Rs 5,428 crore, up 36% YoY and up 32.2% QoQ
ADVERTISEMENT Blended revenue per store and per square feet based on calculated net revenue will likely stand at Rs 4.72 crore, down 7% YoY and Rs 3,511, down 17% YoY, respectively, PhillipCapital said.Calling Trent's revenue growth 'weak', PhillipCapital assumed LFL growth to be -4%. 'This would also be because of Trent's strategy of cannibalization from newly opened stores near high-performing locations, a broader demand slowdown, geopolitical headwinds and the natural impact of a high comparative base,' it said in a note.Meanwhile, Kotak attributed the strong double-digit revenue growth to new store additions in Zudio (20 net store additions on a QoQ basis) and Westside (5 net store additions on a QoQ basis), partially offset by 5.7% YoY decline in revenue per square feet. We expect YoY area growth of 39%, driven by addition of larger sized stores.Trent's revenue growth is expected to remain robust, led by aggressive store additions in Westside and Zudio.
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– PhillipCapital: Rs 724 crore, up 19% YoY and up 10% QoQ– Nuvama: Rs 560 crore, down 8% YoY and down 15% QOQ– MOFSL: Rs 718 crore versus Rs 611 crore in Q1FY25– Kotak Equities: Rs 935 crore, up 53.2% YoY and 42.5% QoQEBITDA performance is divided. While Kotak expects a sharp rise driven by strong revenue and scale benefits, Nuvama forecasts a decline, citing lower gross margins and competitive intensity. Most brokerages agree margins will remain under pressure due to Zudio's growing share.
– PhillipCapital: 15.1%, down 17 bps YoY and down 86 bps QoQ – Nuvama: 11.7% (↓360 bps YoY from 15.3%)– MOFSL: 15% in Q1FY26 Vs 15.3% Q1FY25– Kotak Equities: 17.2, versus 193 bps YoY and 124 bps QoQ
PC modelled 23 bps gross margin contraction YoY, 25% increase in employee expense YoY and 18% increase in other expenses (including rent expense) YoY. It also expects operating margins to contract by 17 bps YoY primarily due to gross margin contraction led by higher Zudio mix.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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