Trent‘s shares were plummeting on Friday after the company’s second-quarter results failed to meet analysts’ expectations.

What Happened: The Tata Group firm's standalone net profit jumped 46% to ₹423.44 crore compared to ₹289.67 crore posted in the same period last year. Revenue from operations came in at ₹4,035.56 crore, representing an increase of 39.6% against a revenue of ₹2,890.72 crore posted in the second quarter of FY24.

Q2 revenue growth of 40% came as a disappointment after several quarters of outperformance, Kotak Securities said. It attributed the revenue shortfall primarily to slower-than-anticipated store additions and a delayed ramp-up of new stores On the other hand, the firm’s supermarket business Star Bazaar once again reported a healthy quarter with 27% YoY growth, the brokerage said.

Trent’s gross margin of 44.2% was 97 basis points lower than Kotak’s estimates. The standalone area growth of 32% YoY also fell short of expectations due to smaller-than-anticipated store sizes, it said.

The company managed a healthy double-digit like-for-like revenue growth, Kotak noted. It sees the additions of new formats such as Zudio Beauty driving future area addition.

See Also: Tata Group Stock Jumps 4% After Posting Strong Q2 Results

Kotak lowered its FY25-FY27 EPS estimates for Trent by 4%-6% accounting for slower area expansion. It had an “add” recommendation for the stock with a target price of ₹6,800.

The Zudio owner missed Axis Securities’ estimates for all metrics– revenue, net profit and EBITDA. Despite that, it appeared optimistic about the company’s Q2 figures. Trent’s performance stood out amid a challenging environment, Axis noted, with the company delivering strong results relative to its peers.

The fashion segment maintained double-digit like-for-like (LFL) growth which was fuelled by aggressive store expansion, it added. Trent broadened its international footprint by opening its first Zudio store in the UAE and introduced the Zudio Beauty concept in India.

Even though growth has slightly slowed, Trent’s revenue performance continues to be impressive, Axis said. It expects the firm to report strong results in the coming quarters, driven by the festive season. With its continued focus on store expansion and improving product offerings, Axis says Trent is well-positioned for growth across all its formats.

For FY25 the brokerage sees the company’s revenue decreasing by 1%, profit after tax escalating by 7% and EBITDA falling by 2%. Axis maintained a “buy” rating for the stock with an upgraded target price of ₹7,450.

Price Action: Trent was down 2.68% to ₹6,330.95 on Friday morning.

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