This Tata Stock Has Surged 100% This Year, Analyst Sees Further Upside

Shares of Trent have surged up over 100% this year, and analysts at Motilal Oswal see the stock going further up.

The Trent Analysts: Aliasgar Shakir-led analyst team at Motilal Oswal maintained the “buy” rating for the stock with a price target of ₹3,140.

The Trent Thesis: The analysts had an interactive session with P. Venkatesalu, CEO of Trent, to discuss the industry outlook, a new large opportunity for the company, and its growth and margin outlook. In the latest note, the brokerage said that the management envisions Trent as more than just a Westside/Zudio business. There are plans to establish multiple formats under the Trent umbrella. Despite the possibility that not all formats may achieve success, the management emphasizes the importance of maintaining capital allocation discipline and fostering organic growth.

The growth prospects for the Indian market over the next two decades are optimistic, with an expected absolute growth rate surpassing 15%. This growth is anticipated to be driven by various factors, including an increase in per capita income, higher female employment, a trend towards premiumization, and the presence of underpenetrated markets.

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The brokerage added that Trent has shown industry-leading revenue growth driven by several key factors:

a) Healthy Same Store Sales Growth (SSSG) and productivity.
b) Robust footprint additions, indicating an expansion in the company’s presence.
c) A substantial growth opportunity in Zudio, offering a significant runway for expansion over the next three to five years.

Another area of growth, recognised by the analysts, is the grocery segment, Star Bazaar, currently operating with just 65 stores and an annualized revenue of ₹1,800 crore in FY23. As per the firm, the company’s strategy of leveraging its own brand and offering a curated range has been well-received by customers, contributing to the positive momentum in this segment.

Price Action: Trent’s share price was up 1.91% to trade at ₹2,938.50 in the early hours of trading on Wednesday.

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Posted In: Analyst ColorEquitiesPrice TargetReiterationMarketsAnalyst RatingsMotilal OswalTata GroupTrent