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MOSL: Morning India (11/September/19): 1. Trent (Setting store by consistency; investing aggressively); 2. Ecoscope (Will massive monetary easing stimulate the economy?); 3. Lemon Tree Hotel (Strategy in place,

MOrning India (11/September/19): 1. Trent (Setting store by consistency; investing aggressively); 2. Ecoscope (Will massive monetary easing stimulate the economy?); 3. Lemon Tree Hotel (Strategy in place, but execution remains key)

 

Today’s top research Idea

Trent: Setting store by consistency; investing aggressively

• Westside continued delivering steady revenue/sq. ft. growth of 2.5% to INR10.2k in FY19, and, Zudio's revenue/sq. ft. stood at INR14,000 for independent stores on a like-to-like basis, which is significantly higher than the industry average of INR8-10k.
• Management in its AGM revealed its plan to add 35-40 Westside stores and 100 Zudio stores.
• Given consistent SSSG and store throughput led by planned acceleration in store addition, along with a sticky business, a strong private label share offering exclusivity and loyal customer base, TRENT is likely to deliver stable growth hereon.
• This will likely allow it to garner premium valuations. We value Westside at 27x EV/EBITDA, Zara at 27x EV/EBITDA and Star at 1x EV/sales to arrive at a target price of INR515. Maintain Buy.

Piping hot news

Corporate bond issuances on the upswing, reach Rs 5.45 trillion till August

Contrary to expectations, the corporate bond market is witnessing a spurt of issuances, and in the first eight months of this calendar year, the issuances have been the highest ever. While liquidity played a role, banks’ reluctance to lend due to risk aversion and tightened group borrower exposure limits are pushing firms to the corporate bond market space, say experts.