Trent tanks nearly 13%, logs biggest single-day fall in over a year as Q1 growth misses Street estimates

Shares of Tata Group retailer Trent Ltd tumbled 12.67% to an intraday low of ₹2,920 on Tuesday, logging their biggest single-day decline in more than a year after the company's June-quarter business update disappointed investors and raised fresh concerns over the pace of growth in its core fashion business.

The stock emerged as the worst performer on the Nifty 50 after Trent reported 19% year-on-year growth in standalone revenue for the June quarter. While the growth remained robust in absolute terms, it fell short of Street expectations of around 23%, triggering a sharp selloff in a stock that commands one of the highest valuation multiples in India's retail sector.

Premium valuations leave little room for disappointment

Analysts said Tuesday's correction reflected not weak business performance, but the market's elevated expectations from Trent, which has been one of India's standout retail growth stories led by the rapid expansion of Zudio and Westside.

Brokerages also flagged concerns over slowing store productivity and moderating growth in Zudio. According to Reuters, Goldman Sachs described the quarterly update as "well below Street expectations", while Citi pointed to declining revenue per square foot despite a favourable base and highlighted concerns around rising competition and the productivity of newly added stores.

Aishvarya Dadheech, analyst at Fident Asset Management, told Reuters that although Trent had earlier guided for revenue to grow two to two-and-a-half times over the coming years, "growth in Zudio started normalising, which led to market doubts about the company's momentum." He added that "the growth and valuation are not in sync" given the stock's premium multiples.

Brokerages remain constructive on long-term story

The sharp correction comes even as brokerages remained broadly bullish on Trent's long-term prospects in reports published last month.

In a June 23 report, Motilal Oswal reiterated its 'Buy' rating, saying Trent remained in the early stages of its growth journey with only about 2% share of India's fashion and lifestyle retail market. The brokerage highlighted management's long-term expansion plans, including scaling Westside to around 700 stores from 300 currently and Zudio to nearly 5,000 stores from about 960. It also pointed to growth opportunities from emerging formats such as Samoh, Burnt Toast and POME, category expansion and international markets.

However, Motilal Oswal had cautioned that store productivity could remain under pressure as Trent expands deeper into Tier-II and Tier-III markets, where new stores typically take longer to mature. The brokerage added that sustained revenue acceleration and earnings upgrades would be critical for further re-rating of the stock.

Similarly, Axis Securities, in a June 17 report, maintained a 'Buy' rating on Trent, citing the company's aggressive store expansion, resilient profitability and structural opportunity in organised retail. The brokerage noted that Trent added 198 Zudio stores and 52 Westside stores in FY26, taking its total network to 1,286 stores, while describing Zudio as the company's primary growth engine and Westside as an increasingly important contributor to future growth.

Shares of Trent ended 12.64% lower at ₹2,921 apiece on the NSE on Tuesday. Despite its stellar long-term run, the stock has declined more than 20% over the past year, underperforming the benchmark Nifty 50, which has fallen nearly 4% during the same period.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)