TRENT LTD.

Equity
Research Report

SANJEEDEEP MISHRA
 TRENT LTD. Market Cap in Cr. 61,319.8

CMP- 1724.95
Operating Rev. Qtr. Cr. 2,182.8
NSE: TRENT | BSE: 500251
Industry : Retail P/B 23

Trent is India’s leading retailer with a

Net profit QTR Cr. 54.2
presence across various consumer
categories (600+ stores). Inherent
strength of brands (Westside, Zudio, TTM PE ratio 137.9

Star, Zara) and accelerated store

additions have led Trent to be among
MFI 79.2
the fastest growing companies in our
retail coverage universe. • ‘Westside’
(60% of revenues) has proven to be • Zudio now contributes 40% to
one of the most profitable business standalone revenues (from
models as it primarily focuses on selling merely 16% in FY20), with gross
private label brands • ‘Zudio’ (40% of revenues surpassing | 3200+
sales), the value fashion brand, crore in FY23. EBIT margins
continues to be the next leg of growth improved 100 bps YoY to 7.0%
for Trent Trent will continue accelerated
store additions for Zudio with
Consolidated revenues (including JV- opening of 200+ stores in FY24
Star & Zudio) surpass 10000+ crore to 550+ stores (added 117
sales mark in FY23. Zudio has stores in FY23)
demonstrated strong ability to gain • Westside reported gross
market share in value fashion segment revenue worth | 4655 crore with
with focus on improving profitability record high EBITDA and EBIT
margins of 13% and 11%,
respectively, in FY23. SSSG
was at healthy 49% YoY
(partly aided by favourable base). expected to grow at a CAGR pf
With Westside firing on all 31% for FY23-25E.
cylinders, we expect the format to
have registered 25%+ RoIC during Trent has been an outstanding
FY23. Trent expects to add 30 performer with its stock price now
Westside outlets in FY24 • Trent’s rallying over at 40% CAGR in the
grocery format Star Bazar past five years.
continued its calibrated store Trend has delivered leading
expansion strategy (added two industry sales growth of around
stores in FY23) with higher 30% whereas industry average is
emphasis on profitability. Despite of 12%. With a strong operating
muted store addition, revenue grew performance, Trent had a sharp
35% YoY in FY23E implying jump of ROE 17% in FY23.
healthy SSSG. Enhanced store
operational performance led to Shareholding
PBT losses narrowing down to |
104 crore in FY23 (FY22: loss of | Promoters holding remains
138 crore) unchanged at 37.01% in Mar
2023 qtr
With 295 store additions between
Westside and Zudio in FY24-25E FII/FPI have decreased holdings
and liquidity position remaining from 24.76% to 24.43% in Mar
robust with cash investments worth 2023 qtr
600 crore. This will enable it to
have a better edge over the current Mutual Funds have decreased
situation better than its peers. holdings from 9.47% to 8.91% in
Zudio continues to be the growth Mar 2023 qtr
driver for Trent and its revenue is
 Industry Analysis

Indian retail industry is one of the fastest growing in the world. India
ranked 63 in the World Bank’s Doing Business 2020 publication and
ranked 73 in the United Nations Conference on Trade and
Development's Business-to-Consumer (B2C) E-commerce Index 2019.
India’s direct selling industry is expected be valued at US$ 2.14 billion
by the end of 2021.

India is the fifth-largest and preferred retail destination globally. The

country is among the highest in the world in terms of per capita retail
store availability. India’s retail sector is experiencing exponential growth
with retail development taking place not just in major cities and metros,
but also in tier II and III cities. Online penetration of retail is expected to
reach 10.7% by 2024 versus 4.7% in 2019. According to India Ratings
and Research (Ind-Ra), domestic organised food and grocery retailers
are expected to increase by 10% YoY in FY22. By 2024, India's e-
commerce industry is expected to increase by 84% to US$ 111 billion,
driven by mobile shopping, which is projected to grow at 21% annually
over the next four years.
India’s retail trading sector attracted US$ 4.11 billion FDIs between
April 2000-June 2022.
According to data released by the Ministry of Statistics & Programme
Implementation (MoSPI), India’s Consumer Price Index (CPI) based
retail inflation stood at 6.77% YoY in October 2022.
The future outlook consumption by 2025. Healthy economic growth,
changing demographic profile, increasing disposable income,
urbanisation, changing consumer tastes and preferences are some of
the factors driving growth in the organised retail market in India.
 Industry Analysis

ROBUST DEMAND
India is one of the most promising and developing marketplaces in
the world. There is a great deal of desire among multinational
corporations to take advantage of the consumer base in India and
to enter the market first.
*Increasing purchasing power has led to growing demand.
*Nearly 60 shopping malls encompassing a total retail space of
23.25 million square feet are expected to become operational
during 2023-25.

INNOVATION IN FINANCING
Collective effort of financial houses and banks with retailers are
enabling consumers to go for durable products with easy credit.

NCREASING INVESTMENTS
Due to India’s wealth of resources, availability of labour at relatively
low costs, and special investment wages such tax breaks, etc.,
foreign corporations prefer to invest here.
*India’s retail trading sector attracted US$ 4.29 billion FDIs between
April 2000-September 2022.

POLICY SUPPORT
To improve the business climate and make it simpler for foreign
companies to register fully owned subsidiaries in India, the Indian
government has implemented a number of rules, regulations, and
policies.
 About the Company

In 1998, Lakme decided to divest from its cosmetics business and

decided to pursue the field of apparel retailing, given the absence
of established brands in most categories. It was decided that
Lakme would establish a strong presence in the apparel and soft
goods retailing market by opening a chain of departmental stores
across the country.
Towards this end, in March 1998, Lakme acquired Littlewoods
International (India) Private Limited (“LIIPL”) from Littlewoods
International Limited, U.K. LIIPL was in the business of retailing of
readymade garments and related merchandise. In parallel, with
effect from January 1, 1998, Lakme Exports Limited, a subsidiary
of Lakme, was amalgamated with LIIPL and the merged entity was
named as Trent Limited. Subsequently, with effect from July 1,
1998, Trent Limited was amalgamated with Lakme, and the name
of Lakme Limited was changed to Trent Limited.
As part of the Tata group, Trent’s flagship concept, Westside
offers branded fashion apparel, footwear and accessories for
women, men and children, along with a range of home furnishings
& decor. This offer is presented through a differentiated portfolio of
exclusive brands that are in tune with latest fashion trends
appealing to a wide spectrum of style conscious consumers across
defined customer segments. This differentiated approach also aids
in competing effectively in the face of disintermediation risks posed
by diverse competition.
 About the Company

Trent’s value fashion concept- Zudio offers fashion at irresistible

prices for men, women and children. Exclusive fashion is curated
in-house and made available at very sharp price points
Hypermarket and supermarket store chain concept - Operating
under Star, it offers an assortment of products, including staples,
beverages, health & beauty products along with a comprehensive
fresh offering (vegetables, fruits, dairy, non vegetarian products).
The offering is also supported by a compelling range of own
brands at attractive prices.
MISBU is a brand for every girl who wants to stand out from the
crowd and be her own stylish self: she is not the girl next door.
From beauty, to fashion accessories, to a bit of quirky decor,
MISBU helps a girl embellish the ordinary, every day. With the best
in skincare, makeup and accessories, the brand helps her create
fashion forward looks that break the mould and express her style
through chic accessories, skincare, fragrances, deodorants,
lipsticks, nail polish, artificial jewellery and a bit of décor to do up
her personal space in office or at home - at very compelling prices.
 Quarterly Results

Indicator Mar-2023 Dec-2022 Sep-2022 Jun-2022 Mar-2022

Total Qtr Revenue cr 2,268.1 2365.2 2022.7 1847 1373
Operating Expenses Qtr Cr 1,979.7 1980.2 1696.9 1511.5 1194.2
Operating Profit Qtr Cr 203 323.2 255.8 291.6 134.6
Operating Profit Margin Qtr % 9.30% 14.03% 13.10% 16.17% 10.13%
Depreciation Qtr Cr 136.6 118.2 111.6 127.3 89
Interest Qtr Cr 91.6 91.2 91 95.4 81.4
Profit Before Tax Qtr Cr 57.2 175.6 123.2 112.7 8.3
Tax Qtr Cr 18.8 49.6 58.2 31.8 19.6
Net Profit Qtr Cr 54.2 167 93 131.5 0.2
Basic EPS Qtr Rs 1.5 4.7 2.6 3.7 - 0.3
Net profit TTM Cr 444.7 390.7 363.4 362.9 105.8
Basic EPS TTM Rs 12.5 11 10.2 10.2 3

Annual Report
Indicator CAGR 3Yrs CAGR 5Yrs Mar-2023 Mar-2022 Mar-2021

Total Revenue Annual Cr 32.8% 31% 852.9 4673.2 2794.6

Operating Expenses Annual Cr 34.6% 29.7% 7168.4 3924.2 2421.1
Operating Profit Annual in Cr 25.4% 39.8% 1073.7 573.9 171.9
Operating Profit Margin Annual % -5.5% 6.7% 12.63% 12.28% 6.15%
Total Expenses Annual Cr 32.7% 31.6% 8031.3 4539.7 2927
EBIDT Annual Cr 24.7% 40.3% 1334.6 749.1 373.5
EBIDT Annual margin % -6.1% 7.1% 15.70% 16.03% 13.37%
Interest Annual Cr 14.5% 64.6% 369.2 304.7 248.7
Depreciation Cr 25.9% 61.1% 493.7 310.8 257.3
Profit Before Tax Annual Cr 33.9% 22.6% 468.7 106.1 - 133.5
Tax Annual Cr 39% 21.6% 158.4 76.6 - 23.7
PAT Before ExtraOrdinary Items Annual Cr 31.5% 23.1% 310.2 29.5 - 109.8
Net Profit Annual Cr 53.6% 38.6% 444.7 105.8 - 146.2
Net Profit Margin Annual % - 1.3% - 5.8% 3.76% 0.65% - 4.23%
Basic EPS Annual Rs 52.9% 36.9% 12.5 3 - 4.1
 Cash Flow

Indicator CAGR 3Yrs CAGR 5Yrs Mar-2023 Mar-2022 Mar-2021

Cash frm Operating Act. AnnlCr 18.7% 50.6% 594.9 58.5 373.8
Cash frm Investing Act Anl Cr - 50.1% 91.3% - 102.6 56 15.7
Cash frm Financing Annl Act Cr - 323.2 - 491.4 - 108 -371.9
Net Cash Flow Annual Cr - - 0.8 6.5 17.6

Balance Sheet

Indicator CAGR 3Yrs CAGR 5Yrs Mar-2023 Mar-2022 Mar-2021

Total ShareHolders Funds Annual Cr 2.8% 10.2% 2595.5 2364 2313

Minority Interest Liability Annual Cr - 5.6% 142.8% 67.5 45.9 44.5
Total Non Current Liabilities Annual Cr 19.2% 100.6% 4324.6 4662.6 2614.8
Total Current Liabilities Annual Cr 30.9% 12.5% 1094 653.5 751.4
Total Capital Plus Liabilities Annual Cr 13.6% 28.2% 8081.5 7726 5723.7
Fixed Assets Annual Cr 18.9% 50.5% 4601.5 4764.2 3134.6
Total Non Current Assets Annual Cr 14.5% 27.3% 5703.8 5942.6 4320.4
Total Current Assets Annual Cr 11.8% 30.4% 2377.8 1783.5 1403.3
Total Assets Annual Cr 13.6% 28.2% 8081.5 7726 5723.7
Contingent Liabilities+Commitments Cr 25.1% 21.3% 291.6 220.9 205.2
Bonus Equity Share Capital Annual Cr 0% 0% 10.9 10.9 10.9
Non Current Investments Unquoted Cr - - 0 733.9 763.1
Current Investments Unquoted Cr - - 0 478.1 611.2
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 Peer Comparision

Rev Grwth Net Profit YoY Operating

Indicator M. Cap PE P/B
Qtr YoY % Grwth % Rev Qtr Cr
Avenue Supermarts Ltd. 2,43,673.73 102.26 15.15 20.57% 59.36% 10,594.1
Trent Ltd. 61,319.8 137.89 23.03 64.26% 320.19% 2182.75
Aditya Birla Fashion 19,351.42 -537.53 5.78 26.15% 66.89% 2879.73
Shoppers Stop Ltd. 8771.26 75.59 42.57 29.52% 346.83% 923.9
V-Mart Retail Ltd. 4149.56 - 528.67 4.89 29.46% -167.43% 593.91
Spencers Retail Ltd. 571.44 -2.72 - 3.8 0.28% - 73.22% 543.39
V2 Retail Ltd. 433.92 - 33.86 1.76 22.23% - 9.76% 193.43

Indicator CAGR 3Yrs CAGR 5Yrs Mar-2023 Mar-2022 Mar-2021

Total Revenue Annual Cr Indicator Indicator Indicator Indicator Indicator

Operating Expenses Annual Cr Indicator Indicator Indicator Indicator Indicator
Operating Profit Annual in Cr Indicator Indicator Indicator Indicator Indicator
Operating Profit Margin Annual % Indicator Indicator Indicator Indicator Indicator
Total Expenses Annual Cr Indicator Indicator Indicator Indicator Indicator
EBIDT Annual Cr Indicator Indicator Indicator Indicator Indicator
EBIDT Annual margin % Indicator Indicator Indicator Indicator Indicator
Interest Annual Cr Indicator Indicator Indicator Indicator Indicator
Depreciation Cr Indicator Indicator Indicator Indicator Indicator
Profit Before Tax Annual Cr Indicator Indicator Indicator Indicator Indicator
Tax Annual Cr Indicator Indicator Indicator Indicator Indicator
PAT Before ExtraOrdinary Items Annual CrIndicator Indicator Indicator Indicator Indicator
Net Profit Annual Cr Indicator Indicator Indicator Indicator Indicator
Net Profit Margin Annual % Indicator Indicator Indicator Indicator Indicator
Basic EPS Annual Rs Indicator Indicator Indicator Indicator Indicator
 Analysis

Annual revenue rose 81.9%, in the Quarterly revenue rose 64.3%

last year to Rs 8,502.9 Crores. Its YoY to Rs 2,268.1 Crores. Its
sector's average revenue growth for sector's average revenue growth
the last fiscal year was 15.2%. YoY for the quarter was 23.7%.
Annual net profit rose 320.2% in Quarterly net profit rose 33,750%
the last year to Rs 444.7 Crores. Its YoY to Rs 54.2 Crores. Its sector's
sector's average net profit growth for average net profit growth YoY for
the last fiscal year was -245%. the quarter was -115.6%.
Stock price rose 67.5% and Price to earning ratio is 137.9,
outperformed its sector by 47.4% in higher than its sector PE ratio of
the past year. 102.
Debt to equity ratio of 0.2 is less Return on Equity(ROE) for the last
than 1 and healthy. This implies that financial year was 17.1%, in the
its assets are financed mainly normal range of 10% to 20%.
through equity. Promoter shareholding stayed the
MF holding decreased by 0.6% in same in the most recent quarter at
the last quarter to 8.9. 37%.
Interest coverage ratio is 3.6, Promoter pledges are zero.
higher than 1.5. This means that it is
able to meet its interest payments
comfortably with its earnings (EBIT).
 SWOT Analysis
Strength Weakness
Stocks in PE Buy Zone with MFs decreased their shareholding
reasonable durability score and last quarter
rising momentum score. Decline in Net Profit with falling
Consistent Highest Return Stocks Profit Margin (QoQ)
over Five Years Declining Net Cash Flow :
Strong Annual EPS Growth Companies not able to generate
New 52 Week High net cash
Good quarterly growth in the
recent results
Effectively using its capital to Opportunity
generate profit - RoCE improving
in last 2 years Brokers upgraded
Effectively using Shareholders recommendation or target price in
fund - Return on equity (ROE) the past three months
improving since last 2 year 30 Day SMA crossing over 200
Efficient in managing Assets to Day SMA, and current price
generate Profits - ROA improving greater than open
since last 2 year High Momentum Scores
Growth in Quarterly Net Profit with (Technical Scores greater than
increasing Profit Margin (YoY) 50)
Company with Low Debt High Volume, High Gain
Annual Net Profits improving for Volume Shockers
last 2 years Stocks near 52 Week High with
Book Value per share Improving Significant Volumes
for last 2 years
Company with Zero Promoter Threat
Pledge
Strong Momentum: Price above
short, medium and long term
moving averages