Trent a company promoted by TATA Group started back in 1952 with its focus on cosmetics under brand name Lakme. In 1998 company divested from cosmetics and shifted its focus to retail apparel business. Today Trent is a retail operations company and it has number of retail chains under its control. Company with its operations has focus on retail sector with fashion & lifestyle and Food & grocery as their sub sectors.  Trent’s’ vision is to deliver best in class products and services at affordable prices.

Trent’s Business

• Over the years Trent has included 11 retail chains and 2 other companies in its portfolio. Company classifies these retail chains in two categories one is their concepts and other is their alliances.
• Trent has five chains classified as their concept – 
• Westside: It is a lifestyle brand which offers trending fashion including apparel, footwear, home furnishing and decor. Westside has around 18 fashion brands under it’s’ umbrella and operates 214 stores in 90 cities.
• ZUDIO: Zudio focuses on fresh fashion at sharp price points through its 352 stores in 119 cities. Zudio has sold 40 t-shirts, 10 denims and 7 Deos ever minute in last financial year.
• MISBU: MISBU offers beauty, personal care products targeting Genz & millennial. It has 7 stores in 5 cities.
• UTSA: Modern Indian Lifestyle brand focusing on women through its 17 stores in 11 cities.
• SAMOH: It was launched in April 2023 with focus on premium and contemporary apparel. It has 2 stores in 2cities
• Under the second category Trent has six retail chains which are operated by its subsidiaries or joint ventures – 
• STAR: It is chain of hypermarket and supermarket stores offering food and groceries, home care, health and beauty products. It has 63 stores in 10 cities.
• ZARA: Trent in Joint Venture with Inditex group (Spain) operates 20 stores in 11 cities.
• Massimo Dutti: Trent in Joint Venture with Inditex group (Spain) operates 3 stores in 2 cities.
• Booker India Limited: Offers products in categories across staples, process foods, and confectionary etc. 5 cash and carry stores.
• Fiora Hypermarket: Operates stores of STAR in 10 cities.
• Fiora Online: Operates Starquick online platform. It is online D2C brand.
• Apart from retail chains the two other companies in Trent’s portfolio are –
•  Fiora Business Support Services: This Company provides business solutions and outsourcing services.
• Trent MAS: Manufactures apparel and apparel related products.
• Detail study of  Trent’s most successful brand Westside – 

• Westside: Key Metrics 

Sales per square feet in Rs. – 2021 took a hit from COVID, recovery was noted in 2022 and now a growth on pre COVID levels in 2023.

                        Bill size – Sustainable increment in bill size over the years.

                      EBITDA – Margins are at all time high reflecting improvements in operations.

                      Comparison with closest competitor – in 2023

Positive Industry Outlook 

• India is expecting that 43% of its population will live in urban areas by 2035. This shift from rural life to urban convenient lifestyle is expected to positively impact the consumption of lifestyle and fashion products.
• Retail sector is contributing around 10% in Indian GDP and 8% in overall employment. This sector is expected to grow at 9% p.a. to reach USD 2 Trillion by 2032.
• The growth in D2C segment will be a key factor in growth of retail industry and it is projected to grow at 25-30% p.a. till 2026 and reach USD 140 Billion by 2026.
• GOI has approved PLI scheme for textile production in India with an approved financial outlay of USD 1.37 Billion over next five years. GOI has also allowed 100?I in online retail of goods and services.

Peer Comparison

Strong Growth Plans

• Going forward Trent is planning to penetrate Indian market by expanding their current footprint of 6.2 million sq. ft.
• In product portfolio Trent will focus on sharp prices with differentiated products and major focus will be on Westside, Zudio, Utsa and STAR.
• Trent will scale up its supply chain to support growing business with emphasis on efficient inventory management.
• Company will focus on D2C segment by leveraging their association with Tata Neu.
• Trent has recently made new partnership with MAS group Sri Lanka and going forward will focus on such new partnership to grow company sustainably.

Key Performance Indicators for Trent

• Strong Growth in stores

• Growing Weststyle club 

• EPS Growth at 42?GR

Financial Performance

Revenue – Trent has reported growing revenue with CAGR of 32%.

PAT – Focus on store profitability have been effective for Trent, they have reported PAT growth at 45?GR.

ROCE – ROCE is showing steady growth to reach pre-covid levels.

Shareholding Pattern – Promoters’ holding is at same levels, DII and FII holdings has changed a little with no impact on public shareholding.

SWOT Analysis 

Strengths – 

• Good dividend payout has been maintained by company.
• Promoters holding are at same level with no pledge.
• Low levels of debt with decreasing D/E.
• Company is improving margins at all levels.

Weakness –

• Company is not able to generate cash, net cash flow is decreasing Y-o-Y basis.
• Company has low return on equity.

Opportunity –

• Healthy level of DII and FII holdings.
• Company is expected to perform good in coming quarters.

Threats –

• Trent has threat from daily changing trends and consumer expectations.
• Company has a real estate risk as quality estates are limited and Trent needs them to expand its presence.
• Due to increasing competition customer acquisition is not easy and becoming more expensive.

Conclusion – 

• Indian retail sector is growing with a good pace and Trent has support from strong promoters which can help company to acquire big market share.
• Overall business of company is well diversified within retail sector which opens many opportunity and mitigates concentration risk.
• Increasing revenue and margins are always a good sign for a business but Trent needs improve its cash flow.
• Trent has a P/E of 172.25 against industry average of 67.73.

Note – Some parts of data reflected in report is taken from following sources-

• Annual report 
• Investor presentation - Trent

• Company website and IBEF

  - Team Icore