Trent share price: Why is this Tata group stock rising despite the stock market crash? EXPLAINED

Trent share price in focus today: Shares of Tata Group’s retail arm, Trent, rose 3% on June 23 to hit a five-month high of ₹6,078 apiece, outperforming a weak broader market as the stock was officially included in the BSE Sensex today, a move expected to trigger $330 million in passive inflows, about 5.8 times its average daily volume (ADV), according to Nuvama Alternative & Quantitative Research.

The Tata Group stock has been buzzing of late on Dalal Street, despite the Indian stock market being under pressure amid rising tensions in the Middle East, as the conflict between Iran and Israel deepens.

Optimism surrounding the stock was fueled by the company’s continued commitment to its long-term target of achieving 25% annual growth, with a focus on value fashion brand Zudio, expansion into micro-markets, and entry into new categories, the retailer told analysts at its investor day on June 18.

The bullish sentiment follows a solid Q4 performance. Trent posted a 37% year-on-year jump in EBITDA to ₹656 crore, well ahead of market expectations of ₹580 crore. Margins also improved to 16%.

Trent aims to remain relevant in the fashion business by using Zudio as its primary growth engine, according to reports by multiple brokerages.

“Remaining relevant in the fashion business is the most important factor, and all decisions are centered around that. LFL, store count growth and TAM are all secondary. There is no first-mover advantage really. So many first movers have become obsolete. There is no point driving LFL via discounts or driving price-led growth at the cost of volumes (and losing relevance) or chasing TAM by adding more and more categories,” analysts at Nuvama Institutional Equities said in a report released on Thursday following Trent’s 18 June investor day meet.

It added that the retailer's commitment to no discounting, maximizing full-price sales, avoiding advertising, and exclusively using private labels significantly narrows its strategic options.

Trent is aggressively pursuing growth, aligning with Noel Tata's vision, which is to grow the retailer 10x its current size. Noel serves as the chairman of both Trent and Tata Trusts.

Brokerages retain bullish view on Trent

Following the company’s ambitious growth targets, domestic brokerage firms have retained a positive outlook on Trent’s business. Nuvama raised its target price on the stock to ₹6,627 from the earlier target of ₹6,224, while maintaining its ‘buy’ rating.

Likewise, Sharekhan also maintained a ‘buy’ rating, with a revised SOTP-based price target of ₹6,781. Morgan Stanley reaffirmed its ‘Overweight’ view on the stock, noting the management’s continued confidence in achieving its 10x growth goal by FY32, while balancing expansion with profitability.

Meanwhile, HSBC initiated coverage on Trent with a ‘buy’ rating and a target price of ₹6,700, citing strong growth potential driven by the rapid expansion of its value fashion brand, Zudio.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.