Trent Ltd - Research Report

Private Client Research






Trent Ltd


February 03, 2020

Sensex: 39872.31

CNX Nifty: 11707.90


BSE: 500251

Reco Price
Rs. 587
Price Target (1 Year)
Rs. 765


February 03, 2020



CNX Nifty








Stock Data

CMP (Rs)
Face value (Rs)
52 Week Range (Rs)
611.95 - 320.10
Market cap (Rs Crores)
Price To Book Value (x)
P/E Ratio (x)

One Year indexed Stock Performance

Trent Ltd Sensex
Trent Ltd
Return (%)


(in %)

+91 22 6639 3000


Established in 1998 and part of the Tata group, Trent is headquartered in Mumbai, but has pan-India operations. Trent is one of the leading players in the branded retail industry in India.

The company primarily operates stores across the following four formats:

  1. Westside, offers an exclusive range of its own branded fashion apparel and is the mainstay of the retailing business of the company. The company has already established 150 Westside stores measuring 8,000-34,000 sq. ft. across 76 cities.
  2. Zudio, offers clothing and accessories at affordable prices. The company has established 40 Zudio stores across 25 cities.
  3. Star, is a fresh food and grocery retail chain, operating 44 supermarkets and hypermarkets across 7 cities.
  4. Landmark, a chain of bookstores operating through 5 independent stores and select Westside outlets, also offers toys, stationery and other peripherals.

Aggressive store expansion on the cards

Consistent same store sales growth (SSSG):
Westside has registered total sales growth of high double-digit and SSSG of high single-digit consistently from FY15 to FY19. Store additions has been robust from 3 stores in FY08 to 150 stores in FY19.

Trent Westside Performance

Own-brand-led business model:
Own brands contribute over 97% of total revenues. “Own-brand-led” business model allows active control across the value chain with respect to key aspects of design, branding, sourcing, logistics, pricing, display, promotion and selling. This business approach has been more robust and sustainable than the department store models that predominantly retail third party brands.

Value fashion - gaining traction:
Value fashion is a promising segment in fashion retail with the possibility of appealing to a wider customer base and reaching more addressable geographies. Popular and mass-priced products possibly constitute over 75% of the total fashion market in India.

Trent’s value fashion concept - Zudio - offers fashion at affordable prices for women, men and children. The exclusive fashion is curated in-house and made available at affordable price points.

Encouraging online sales through Tatacliq:
Westside has exclusive online presence through - Tatacliq - a Tata Group marketplace initiative. Significant progress was made on omni-channel initiative during the previous year. The online and in-store offering of the concept are now closely aligned.

Star is also scaling its operations via online grocery portal – Starquik.

Accelerated store expansion program for Zudio
In FY19, Zudio adopted an accelerated expansion program. As of March 2019, it has presence through 40 standalone stores. In FY19 itself, 33 Zudio standalone stores were added in the portfolio.

With an average store size of 6,000-8,000 sq ft, the concept affords faster expansion across numerous micro-markets.

Joint Ventures (JV) and Associates to start contributing
Star - a 50:50 JV between Trent Ltd and Tesco PLC UK operates stores focusing on categories like food and groceries, home care, apparel, home décor, health and beauty products. The current portfolio of 39 stores reported total income of Rs.1,007.84 crores in FY19 vis-à-vis Rs.961.66 crores in FY18. The losses declined from Rs.90.32 crores in FY18 to Rs.84.56 crores in FY19.

The Company has two separate associations with the Inditex group of Spain. One entity operates Zara stores and the other operates the Massimo Dutti stores in India.

During FY19, the Zara entity recorded revenues of Rs.1,437.87 crores and PAT of Rs.71.49 crores. Total store count for Zara stood at 22. The entity for Massimo Dutti operates 3 stores and recorded total revenues of Rs.63.58 Crores in FY19.

Acquisition of Booker India Pvt. Ltd. (BIPL)
Trent has acquired 51% shareholding of BIPL on 23rd September 2019. BIPL operates 6 stores across Maharashtra and Gujarat with turnover of Rs.238 crore for FY19.


India is one of the most dynamic retail markets in the world and is expected to be around Rs.60 lakh crores in 2019 growing at a CAGR of around 14% during 2017-20.

Fashion & lifestyle market in India is expected to grow at a CAGR of around 14% during 2017-25 to reach around Rs.21 lakh crores.

Total apparel market stands around Rs.4.5 lakh Crores and is expected to grow at a CAGR of around 9% during the same period. Growth in this segment is expected to be driven by branded apparel and women & chlidren fashion. Branded apparel market is expected to grow at a CAGR of 12-14% during the same period.

Food & Grocery retail in India offers significant opportunity for retailers with unorganized segment still contributing over 95% of the market.

Profit & Loss Statement:- (Consolidated)

(Rs Crores)

Particulars 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21
Net Sales 1927.55 2157.46 2630.24 3208.89 3914.85
Inc/Dec in Stock (29.86) (38.51) (148.23)
Cost of material consumed 1074.20 1216.74 1623.28
COGS 1044.34 1178.23 1475.05 1740.56 2106.08
Gross Profit 883.21 979.23 1155.19 1468.33 1808.77
% Margin 45.82 45.39 43.92 45.76 46.20
Employee expenses 192.53 230.48 286.81 358.51 437.39
Other Expenses 558.41 534.35 626.79 530.06 609.56
EBITDA 132.27 214.40 241.59 579.77 761.82
% Margin 6.86 9.94 9.19 18.07 19.46
D&A 41.29 45.53 51.67 224.44 269.33
EBIT 90.98 168.87 189.92 355.33 492.50
Other Income 98.99 44.21 40.82 96.00 40.00
Finance cost 45.55 43.78 50.64 245.28 282.07
Profit Before Tax 144.42 169.30 180.10 206.05 250.42
Tax 50.50 59.62 73.61 51.52 62.61
Tax Rate % 34.97 35.22 40.87 25.00 25.00
PAT 93.92 109.68 106.49 154.53 187.82
Share of profit/loss of associates -9.06 -22.71 -9.53 -4.50 4.00
Total comprehensive income 84.86 86.97 96.96 150.03 191.82
% Margin 4.40 4.03 3.69 4.68 4.90
EPS 2.55 2.62 2.92 4.23 5.40
Source: Stockaxis Research, Company Data


Trent provides an opportunity to invest in India’s high growth retail apparel market. Through Trent we are investing in strong brands like Westside, Zudio, Star bazaar, and Zara. With 150 stores Westside is a leading brand contributing 90% of company’s revenue.

The capital infusion from promoter of Rs.950 cr. will further help in store addition at much faster pace in Westside and Zudio. We expect revenue / PAT to grow at 22% / 32% CAGR from FY19 to FY21E.

We value Trent at 34x EV/EBITDA FY21E and initiate buy recommendation with target price of Rs.765.