The stock’s sharp decline comes after rising 23% in the past month and 50% from its March 2026 low as investors bet on a pickup in revenue growth from the 20% year-on-year pace seen in Q4FY20. Instead, print saw a decline in growth, triggering a selloff.
The numbers behind Q1 missed
Trent’s 1Q standalone revenue stood at Rs 5,666 crore, up about 19% year-on-year, below expectations of about 22% year-on-year growth. Revenue from sales of products, without GST, also grew by about 19% year-on-year.
The growth was primarily driven by a 26% YoY increase in store count, but revenue per store declined nearly 5% YoY compared to a 4% YoY decline in Q4FY2016 – a trend that points to either slower growth of new stores or a continuation of the cannibalization effect at existing stores.
Store expansion also declined during the quarter. Trent added 26 stores in 1QFY27, taking its total fashion format store count to 1,312, up 26% year-on-year. Value fashion chain Zudio added 19 net stores to reach 982 outlets, up 28% year-on-year, while Westside added only one net store, taking its count to 301, up 21% year-on-year. Trent’s other fashion formats increased by six stores year-on-quarter to 29.
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What are the brokerages saying
Citi, which has a sell rating and a target price of Rs 2,733, is one of the most bearish among brokerages, having reported standalone revenue growth of 19% year-on-year, compared to its own estimates of 23%, and 20%, 16% and 17% in the last three quarters. It said average revenue per square foot, assuming the same new store size as the previous twelve months, declined 12.2% year-on-year, while the fourth and third quarters declined 11.6% and 16.1% respectively – a weak trend, even if it benefited from a softer base.
The brokerage said it will remain cautious given the still weak trend of revenue per square foot along with increasing competition, impact of cannibalization and expansion of new stores in tier 2/3 cities. It noted that the first quarter is seasonally weak for store additions, with Westside and Zudio adding 1 and 19 stores, respectively, versus its estimates of 0 and 6. Macquarie, which maintains an outperform rating with a target of Rs 3,600, had flagged weaker-than-expected sales growth in the print, saying it believed the pace of same-store-sales growth has slowed from Q4 levels, and that a growth slowdown is likely to impact in the near term. Display. It said improvement in price conditions and consumer demand outlook will help improve growth.
Bernstein, the outperformer with a target price of Rs 3,500, said year-on-year revenue growth for the standalone business in 1QFY27 stood at 19% versus estimates of 20.5%, adding that the growth was below expectations. It said store growth was slow for Westside (+1), while Zudio (+19) was good, and the growth was below expectations and less than what the company did in 1QFY25. However, Bernstein said the first quarter is typically the slowest for additions, so he’s not concerned yet about meeting accelerated store guidance for FY27.
Morgan Stanley, which is overweight with a target price of Rs 3,151, said 1Q standalone revenue excluding GST grew 19% versus estimates of 21%, similar to the 20% growth seen in the fourth quarter. It expects 1Q standalone EBITDA margin to increase 100 basis points year-over-year to 18.5%, from 18.6% in the fourth quarter. After a very strong fourth quarter, the pace of store expansion slowed in the quarter with net store openings of 19 and 1 at Zudio and Westside, respectively. Morgan Stanley said the stock was up 20% last month ahead of the results and could see some near-term weakness given the slightly weaker print.
Should you buy Dip in Trent?
Provides clear information on the brokerage split debate. Three of the four – Morgan Stanley, Bernstein and Macquarie – retain bullish ratings (overweight/outperform) with target prices of Rs 3,151, Rs 3,500 and Rs 3,600 respectively, all still pointing to upside from current levels, seeing the slowdown as largely a seasonal, first quarter phenomenon and still pointing to healthy Zudio additions and stable margin trends.
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Citi stands out with a Sell rating and a target of Rs 2,733, pointing to structural concerns of a persistently weak revenue-per-square-foot trend, rising competition and cannibalization risk, which predate this quarter’s miss and, in its view, are unlikely to reverse quickly.
What all four have in common is that store expansion, not same-store growth, is driving Trent’s numbers, and revenue per store/per square foot continues to decline. Whether the decline is a buying opportunity depends on which of these two narratives the investor believes: a seasonal Q1 soft patch (the bullish case) or deeper structural stress on productivity as companies move into smaller cities (the bearish case).
(Disclaimer: The recommendations, suggestions, views and opinions given by experts are their own. These do not represent the views of The Economic Times)