Trent Shares Plunge 6% Despite Q2 Profit Jump

Trent Limited, the retail arm of the Tata Group, saw its shares tumble over 6% on Monday, hitting a fresh 52-week low of ₹4310 on the BSE, despite posting a strong double-digit growth in Q2 profits.

The stock dip reflects investor caution over revenue growth, which, though up nearly 16% year-on-year (YoY), showed signs of deceleration. Analysts noted that while the company added ~43% more store area YoY, revenue per square foot dropped sharply by ~17%, hinting at cannibalisation at the store level.

Q2 Performance Highlights

Trent’s consolidated net profit rose to ₹373.42 crore, marking an 11.44% increase from last year. The growth was largely supported by rigorous cost-control measures. However, the expansion into tier-2 cities and newer stores, which require a longer gestation period, slowed revenue momentum.

Analysts from Nuvama Research highlighted that slower store productivity pressured profitability despite cost optimisations. Similarly, Motilal Oswal Financial Services (MOSL) pointed out that higher depreciation weighed on earnings, even as EBITDA estimates saw a 4-5% boost from cost savings.

Analyst Outlook

The contrasting perspectives among brokerages are evident in their ratings. Nuvama revised its target price for Trent down to ₹5,189 from ₹5,850, maintaining a ‘HOLD’ rating. MOSL, on the other hand, kept a ‘BUY’ rating with a revised target of ₹6,000, citing the company’s strong footprint, double-digit growth potential, and emerging category expansion like Beauty, Innerwear, Footwear, and LGDs.

Investors remain cautious, keeping an eye on how Trent can accelerate revenue growth alongside cost optimisation in the coming quarters.