MOSL: TRENT (Neutral)-Recovery much better v/s first wave; aggressive store adds in place
TRENT: Recovery much better v/s first wave; aggressive store adds in place
(TRENT IN, Mkt Cap USD4.5b, CMP INR947, TP INR850, 10% Downside, Neutral)
- TRENT’s revenue came in 57% below pre-COVID levels (1QFY20; 12% miss), better than ABFRL / Shoppers Stop and V-Mart. However, format-wise, we estimate Westside to be 60–65% below pre-COVID levels, in line with peers. EBITDA/PAT continued to report loss at INR318m/INR838m (6% miss).
- Unlike last year, recovery post the lifting of the lockdowns has been swift, with July’21 at >80% of pre-COVID levels. We largely maintain our FY23E estimate, factoring in a 19%/22% CAGR for Revenue/EBITDA over FY20–23E, on the back of strong recovery and continued steady store adds. Nevertheless, the rich valuation leaves a limited upside. Maintain Neutral.
Revenue fueled by Zudio, store adds; net loss narrows YoY (6% miss)
- Standalone revenue grew 3.4x YoY to INR3.3b (12% miss), aided by higher operation levels of 46% in the Fashion business (v/s 26% in 1QFY21). Revenues, however, were lower by 57% vis-à-vis pre-COVID levels (ABFRL / Shoppers Stop / V-Mart were down by 63%/76%/61%).
- As per our workings, Westside declined 60–65% v/s pre-COVID levels, while Zudio (with more than double the stores) has grown 59% v/s pre-COVID levels.
Trent Limited is engaged in the retail sale of readymade garments. The Company's segments include Retailing and Others. It primarily operates stores across three formats: Westside, Star and Landmark. Westside offers apparel, footwear and accessories for men, women and children, along with furnishings, decor and a range of home accessories. It offers products in approximately 60 cities across over 90 stores. Star hypermarket and convenience store chain offers a range of products, including staple foods, beverages, health and beauty products, apparel, home furnishings, vegetables, fruits, dairy and non-vegetarian products. The Star brand operates through approximately 30 stores under Star Daily, Star Market & Star Hyper banners. Landmark is a family entertainment format that offers a range of toys, front-list books and sports merchandize. Westside offers in-house fashion brands, such as Wunderlove, Sassy Soda, StudioWest, Zuba, Bombay Paisley, Denim Shop and Gourmet West, among others.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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