Trent’s Q2 Growth Divides Analysts Amid Expansion, Cost Concerns
Brokerages are divided on Trent Ltd.’s second-quarter performance. The Tata Group-owned retail company saw a 23% year-on-year revenue jump to Rs 5,788 crore as of September 30, 2026. Store count reached 1,342, with 10 Westside and 11 Zudio stores added during the quarter, reflecting continued expansion efforts.
Morgan Stanley maintains an ‘overweight’ rating, setting a target price of Rs 3,406. It highlights the company’s revenue growth, which increased from 16-20% in the previous five quarters, as a positive sign, especially with the festive calendar shift. MS characterized the Q2 growth as “strong and neat,” emphasizing the acceleration in revenue despite external challenges.
Citi, however, has a ‘sell’ call with a target price of Rs 2,950. The bank points to a slower-than-expected store expansion and an 8.4% decline in average revenue per square foot, expressing caution due to potential margin risks from input cost inflation. Citi noted that the lower store expansion and weak revenue trends, coupled with increasing competition and cannibalization, could weigh on the company’s performance.
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Goldman Sachs remains neutral, raising its price target to Rs 3,010 from Rs 2,960 after the Q2 revenue beat. However, it shares Citi’s concerns about the impact of raw material costs, anticipating higher costs in Q2 and Q3 along with increased employee expenses due to minimum wage hikes. GS highlighted that while raw material inflation did not affect Q1 gross margins, the pressure is expected to materialize in subsequent quarters.
Trent added 56 net stores in the first half of FY27, compared to 58 in the same period last year and 243 in FY26. While store expansion and improving revenue per square foot could drive re-rating, Citi remains cautious due to weak revenue trends, increasing competition, and margin risks. The brokerage noted that sustained improvement in revenue per square foot, combined with store expansion, could support further re-rating but remains wary of the challenges ahead.
Despite raising its earnings per share estimates by 2% for FY2026-2029, Goldman Sachs maintains a neutral stance, reflecting a cautious outlook on the retailer’s future performance. The brokerage’s revised EPS estimates factor in higher sales growth expectations but are tempered by concerns over raw material and employee cost inflation, showing a balanced view on Trent’s prospects.
