Synopsis : Motilal Oswal has reiterated its Buy rating on Trent with a target price of Rs 3,500, citing a long runway for growth driven by aggressive Zudio expansion, accelerating Star store rollouts and strong execution across formats. The brokerage believes Trent remains in the early stages of capturing India's fashion and lifestyle retail opportunity, with management targeting 5,000 Zudio stores and 700 Westside outlets over the medium to long term.
Motilal Oswal remains positive on Trent
Brokerage house Motilal Oswal has maintained its Buy rating on Trent and assigned a target price of Rs 3,500. The target implies an upside potential of around 12% from current market levels.
According to the brokerage, Trent's growth story remains intact despite the stock's strong run over the last few years. The firm highlighted the company's large addressable opportunity, continued store expansion and strong execution as key drivers of future growth.
Trent still in the early stages of its growth journey
Motilal Oswal believes Trent remains significantly underpenetrated within India's fashion and lifestyle retail market.
The brokerage noted that the company currently commands only about a 2% market share in the overall fashion and lifestyle retail segment, leaving substantial room for expansion.
Since setting a goal in 2023 to achieve tenfold revenue growth over time, Trent has already delivered more than 2.5 times revenue growth and nearly threefold profit growth, demonstrating strong execution against its long-term roadmap.
Massive runway for Westside and Zudio
One of the biggest pillars of the brokerage's investment thesis is the company's ambitious store expansion strategy.
Management has outlined a medium-to-long-term opportunity of scaling:
- Westside stores from roughly 300 currently to 700 stores.
- Zudio stores from around 960 currently to nearly 5,000 stores.
Motilal Oswal believes Zudio remains one of the strongest value-fashion retail concepts in India and still has a significant growth runway across multiple cities and consumption clusters.
The brokerage noted that recent store densification has temporarily affected like-for-like growth. However, management views this as a strategic decision aimed at enhancing customer experience and increasing market penetration in key micro-markets.
Despite these short-term effects, the company continues to target early double-digit like-for-like growth over the long term.
Star format expansion to accelerate from FY27
The brokerage also highlighted the growing importance of Trent's Star grocery and supermarket business.
After a period of store-network optimization and reconfiguration, management expects Star store additions to accelerate meaningfully from FY27 onwards.
The company is targeting annual additions of between 25 and 40 Star stores starting next year.
According to management commentary cited by Motilal Oswal, reconfigured Star stores are currently generating two to three times higher throughput compared to previous formats.
The profitability profile of the Star business is also expected to improve over time due to its strong private-label mix, which currently accounts for approximately 73% of sales.
New formats and overseas expansion offer additional growth avenues
Beyond Westside, Zudio and Star, Trent is also investing in new retail concepts.
The company continues to scale:
- Samoh, its ethnic-wear format.
- Burnt Toast, a youth-focused retail concept.
At the same time, management is preparing to expand internationally through both Westside and Zudio over the medium term.
Motilal Oswal believes these initiatives provide additional optionality for future growth while reducing dependence on any single retail format.
Westside's business model remains a key strength
The brokerage remains particularly positive on Westside's operating model.
Westside follows a 100% own-brand strategy, allowing the company to maintain stronger control over pricing, product differentiation and inventory management.
The format also benefits from rapid merchandise refresh cycles and domestic sourcing, with more than 80% of products sourced within India.
According to Motilal Oswal, this combination helps preserve margins while creating a differentiated customer proposition.
Strong quarterly performance supports growth narrative
Trent reported a strong set of results for Q4FY26.
The company posted a net profit of Rs 413.1 crore, representing a year-on-year increase of 33% compared to Rs 311.6 crore during the corresponding period last year.
Revenue from operations rose 19.2% year-on-year to Rs 5,027.99 crore, up from Rs 4,216.94 crore.
On the operating front, EBITDA increased 44% year-on-year to Rs 653 crore, reflecting continued operating leverage and strong execution across formats.
Shareholder rewards continue
Alongside its quarterly results, Trent announced several shareholder-friendly measures.
The company proposed a final dividend of Rs 6 per share for FY26.
It also approved a bonus issue, under which shareholders will receive one bonus share for every two fully paid-up equity shares held.
These announcements further strengthened investor sentiment around the stock.
Stock performance
Trent has delivered strong returns in recent weeks.
The stock has gained nearly 5% over the last five trading sessions and approximately 14% during the past month.
Over a six-month period, the stock has also risen around 14.4%.
However, despite the recent recovery, Trent remains down nearly 19% over the last 12 months, which Motilal Oswal believes provides an attractive entry point given the company's long-term growth prospects.
Conclusion
Motilal Oswal's bullish stance on Trent is built around three key themes: the enormous runway for Zudio and Westside expansion, accelerating Star-format growth and continued innovation through new retail concepts.
With management targeting 5,000 Zudio stores and 700 Westside outlets over the long term, the brokerage believes Trent remains in the early innings of its growth journey. Strong execution, rising profitability and multiple expansion opportunities continue to support its positive outlook on the stock.
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