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Informist, Tuesday, Feb. 3, 2026

 

By P. Madhu Kumar

 

MUMBAI - Trent Ltd. is expected to report healthy year-on-year growth in revenue and net profit for the December quarter, driven by aggressive store additions across formats, even as weak same-store sales growth and cannibalisation pressures weighed on revenue and margins, according to analysts tracking the company. The company's revenue per square foot is expected to decline over 11% on year due to weak footfalls, negative same-store sales growth, and a higher proportion of contribution from newer stores that are yet to achieve scale.

 

The net profit of the company is estimated at INR 5.43 billion, according to the average of estimates from four brokerages. This implies a near 16% on-year rise and an over 20% jump from the trailing quarter. Estimates for the net profit range from a low of INR 5.32 billion from Nuvama Wealth Management Ltd. to a high of INR 5.53 billion from Motilal Oswal Financial Services Ltd. 

 

Trent's revenue for the December quarter is pegged at INR 53.47 billion, up nearly 18% on year and up over 13% on quarter, according to the average of estimates. The highest revenue estimate is INR 54.8 billion from Kotak Securities Ltd., while the lowest projection is INR 52.2 billion from Mirae Asset Sharekhan Ltd. 

 

The rise in Trent's profit after tax for the December quarter is driven by operating leverage and cost efficiencies, partially offset by higher depreciation. Sequentially, the net profit is expected to rise sharply due to a low base in the September quarter and improved contribution from festive season sales.

 

Strong store expansion continues to be the primary growth driver. Analysts expect Trent has added a substantial number of stores during the quarter, led by its value fashion format Zudio and flagship lifestyle brand Westside. The company is estimated to have added around 50 Zudio stores and five Westside stores on a net basis during the quarter, resulting in a year-on-year retail area growth of over 35%. However, revenue growth is expected to lag area expansion due to cannibalisation of older stores and a rising share of stores in Tier-II and Tier-III cities, which typically report lower initial sales.

 

Analysts noted that low demand, particularly in discretionary spending, continued to weigh on consumption during the quarter, impacting like-for-like growth across formats.

 

Trent's gross margins are expected to remain under pressure, with estimates pointing to a contraction of 80-130 basis points on year. This is due to a higher mix of revenues from Zudio, which operates at lower gross margins compared to Westside, as well as sustained and intense promotions amid high competition. Some brokerages expect the company's gross margin to decline to around 44.0% from 44.7% in the year-ago quarter, continuing the trend seen in previous quarters.

 

The company's earnings before interest, tax, depreciation, and amortisation are estimated at INR 10.39 billion, according to the average of estimates from three brokerages, sharply higher both sequentially and on year, boosted by benefits of scale from network expansion and cost optimisation despite pressures on gross margins.

 

Despite pressure on margins, the company's earnings before interest, taxes, depreciation, and amortisation growth is expected to remain robust, supported by tight cost controls and gains in structural efficiency. Analysts believe benefits from implementation of radio frequency identification, particularly in inventory management and man power optimisation, continue to play out and are likely to support operating margin. The EBITDA margin is expected to expand around 80-130 bps on year to nearly 20%, even in the face of weak same-store sales growth.

 

Operating profit growth, however, is unlikely to fully translate into profit before tax growth, as higher depreciation from accelerated store additions are expected to weigh on the bottom line. As a result, while EBITDA growth is estimated at over 25% on year by some brokerages, profit before tax growth is expected to be more moderate at mid-teen levels.

 

Analysts are divided on the near-term outlook for the company. While the long-term growth story focused around store expansion, brand strength, and execution capabilities remains intact, near-term risks persist. Weak demand, negative same-store sales growth, cannibalisation in dense urban micro-markets, and pressure on revenue per square foot remain key concerns. In addition, sustained expansion in smaller cities could dilute average store productivity in the near term.

 

Trent will announce its December-quarter earnings Wednesday. Investors will closely track management commentary on same-store sales trends, recovery of demand after the festive season, pace of store additions, and margin sustainability. Updates on Zudio's unit economics, Westside's growth trajectory, and the company's medium-term expansion strategy will be key triggers for the stock in the near term.

 

Of the seven brokerage reports on the company available with Informist, six brokerages have a 'buy' recommendation with an average target price of INR 5,356 per share. This is an upside of nearly 46% from the current price of the stock. One brokerage has a 'hold' recommendation on the stock. Trent's stock has slipped over 20% since the company declared its earnings for the September quarter. 

 

On Tuesday, shares of Trent closed at INR 3,822.80 per share on the National Stock Exchange, up over 2%.

 
Following are the Oct-Dec earnings estimates for Trent Ltd. from four brokerages in the descending order of the estimate of net profit in INR billion:

Brokerage Name	Net Sales	Net Profit	EBITDA
Kotak Securities Ltd	54.81	5.49	10.64
Motilal Oswal Financial Services Ltd	52.87	5.53	10.44
Mirae Asset Sharekhan Ltd	52.22	5.37	-------------
Nuvama Wealth Management Ltd	53.97	5.32	10.07
Average	53.46	5.43	10.39

End

 

Edited by Tanima Banerjee

 

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