TRENT REVENUES GREW BY 29 PERCENT YOY TO RS4106 CRORE LARGELY IN-LINE WITH OUR EXPECTATION

News: Trent revenues grew by ~29%yoy to Rs4,106.1crore largely in-line with our expectation of Rs4,131.9crore. Revenue growth was driven by strong store addition of 140stores (including 130 Zudio stores); addition of 3.8mn sq.ft on y-o-y basis during the quarter. Like-for-like growth for quarter stood in mid-single digit (street was expecting low single digit) and for FY25 the like-for-like growth stood in double digits. Gross margins decreased by 266bps yoy to 42.6%, which we believe is mainly on account of change in mix. Other expenses as percentage to sales decreased by 140bps yoy to 10.6% and Employee cost grew by just 3% during the quarter. This led to 122bps expansion in the EBIDTA margins to 16.0%, which was better than our expectation of 14.2% and street expectation of 14.0% for the quarter. EBIDTA grew by 39.4%yoy to Rs665.2crore. Higher store addition in Q4 led to sharp increase in depreciation cost to Rs263.1crore. Hence, PAT grew by 21%yoy to Rs349.4crore ahead of our expectation of Rs310crore and street expectation of Rs280crore.

View: Trent Q4FY25 operating performance was better than our as well as street expectation mainly on account of better-than-expected EBIDTA margins. The company is focusing on expanding its reach and becoming more accessible to its customers in the existing metros/tier 1 towns. Further it is exploring new markets to expand its store presence. Its Value fashion brand Zudio has crossed store count of 765 stores and revenues exceed USD1bn in FY25. Management in the press release Full year's performance provides a true picture of the company's overall performance. Trent’s like-for-like (LFL) growth for FY25 stood in double digit. We should expect LFL growth to be at high single digit to low double digit in the coming years. This along with strong store addition (200+ Zudio stores and 15-20 Westside stores) will help the company to maintain strong double digit revenue growth momentum. On the other hand, stores launched in the last 2-3 years attaining maturity will help profitability at store level to improve adding to overall margins in the coming years. Trent’s differentiated business model, strong positioning in the value fashion segment and lean balance sheet makes it one of the better picks amongst large retail peers.

Impact: Positive