Buy Trent Ltd; target of Rs 380: ICICI Direct
ICICI Direct’s research report on Trent Ltd
Westside continues to be one of the most successful, established franchises in the women’s wear category. With steady same store sales growth (8%) and aggressive store addition (added 18 stores, the highest store addition historically in a single year), revenues from the Westside format grew robustly by 20% YoY in FY18. Westside has proven to have one of the most profitable business models as it primarily focuses on selling private label brands. Share of private label brands has improved significantly from 80% in FY13 to 96% in FY18.
Zara and Star market would provide impetus to revenue growth, going ahead. Also, a change in strategy to focus on medium format stores (5000-10000 sq ft) under Star banner and improvement in Zara margins would provide an additional delta in profitability for Trent. We maintain BUY rating on the stock with a target price of | 380.
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