Brokerages bullish on Tata group’s Trent; Zudio emerges as growth powerhouse

Brokerages remain confident in Trent’s long-term growth story after the Tata group firm shared its strategy around building brands, categories, and new geographies during its annual analyst meet. They expect the fashion and lifestyle retailer to deliver a medium-term CAGR of around 25% by leveraging its back-end infrastructure to incubate new brands, scale up new categories, and explore opportunities in new markets.

At Trent's recent investor day, the management provided valuable insights into their growth strategies, emphasising city market shares over like-for-like (LFL) growth as a key performance indicator, domestic brokerage Nuvama said in a report. A critical focus was placed on the Star initiative, with hygiene and quality at the centre of attracting store traffic through its fresh offerings.

“Looking ahead, Zudio appears to be the primary growth engine. The financial viability of smaller store concepts—Samoh and Zudio Beauty—has not been conclusively proven yet to warrant aggressive expansion,” the brokerage highlighted in its report.

Notably, Zudio, the company’s value fashion concept, has emerged as the key growth driver for Trent in recent years, tapping into the college crowd with affordable, trendy apparel that drives high footfall. This success has been further amplified by a smart, cluster-based strategy that delivers significant economies of scale, cementing Zudio's lead in the fast fashion arena.

Trent has ruled out acquisitions, as it retains focus on organic growth, which offers a better risk-reward, said another domestic brokerage, Emkay Global. The company aspires to achieve organic growth by leveraging its back-end infra toward incubating new brands (portfolio gaps), scaling up new categories in existing stores (innerwear, footwear, beauty), and exploring opportunities in new markets (including international), it said.

Trent primarily operates stores across five key formats–Westside, Zudio, Star, Landmark, and Utsav. It operates an extensive store network comprising 248 Westside stores, 765 Zudio stores, and 78 Star stores.

The flagship Westside offers branded fashion apparel, footwear, and accessories for women, men, and children, in addition to a diverse range of home furnishings and décor. Zudio, the company’s value fashion concept, provides trendy fashion for men, women, and children at highly competitive price-points, with exclusive in-house curated collections. Star Bazaar is a chain of hypermarkets and supermarkets, while Landmark features a curated selection of toys, frontlist books, stationery, and sports merchandise. 

Most analysts retain bullish stance

Nuvama remained optimistic about the business outlook and adjusted revenue estimate for FY27 up by 0.4% and trimmed profit after tax (PAT) by 4%. The brokerage has maintained a ‘buy’ call on the stock. Foreign brokerage Macquarie has maintained its 'outperform' rating, while Morgan Stanley retained the 'overweight' call.

Axis Bank also recently recommended a ‘Buy’ call on the stock.

Despite the positive outlook, shares of Trent were trading flat at the ₹ 5,720 level on the BSE at the time of reporting. On Thursday, the retail heavyweight moved in a narrow range, rising over 1% to ₹5,800 per share, while it touched an intraday low of ₹5,665.95 on the BSE.

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