Motilal Oswal Ups Target Price for Trent to Rs 5250

Trent Sees Revenue Growth and Improved Profit Margins in 4QFY26

Trent, a prominent retail company, has reported a significant recovery in its growth rate, with revenue growing approximately 20% in the fourth quarter of fiscal year 2026 (4QFY26). This growth was largely driven by a low single-digit increase in like-for-like (LFL) sales, an improvement from the mildly negative growth rate seen in the previous quarter (3Q). The company's performance was also boosted by the addition of new stores, with 198 net new Zudio, 52 net new Westside, and 6 net new Star stores added in fiscal year 2026 (FY26).

Trent's gross margin expanded by approximately 170 basis points (bp) year-over-year (YoY) in 4QFY26, likely due to a favorable mix of sales, with an increase in Westside store additions contributing to this growth. The company has also demonstrated robust cost controls, with pre-Indian Accounting Standards (IND AS) earnings before interest, taxes, depreciation, and amortization (EBITDA) rising by 43% YoY in 4QFY26. This improvement was driven by a 215 bp YoY expansion in margins.

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Outlook and Recommendation

Following this improved performance, Motilal Oswal has reiterated its "BUY" recommendation on Trent, with a revised target price of INR5,250. This recommendation is premised on a valuation multiple of 45x for the standalone business (Westside and Zudio), 2.5x for the Star joint venture (JV), and approximately 2x for the Zara JV. The stock currently trades at a multiple of approximately 62x for fiscal year 2028 (FY28) standalone price-to-earnings (P/E), excluding the contribution from the Star and Zara JVs.