Shares of Tata Group's retail arm Trent have consistently given astonishing returns to its investors. Just in the last three years, the stock has more than tripled investor wealth, surging as much as 231 percent in this period.
The stock jumped from around ₹324 in Feb 2019 to around ₹1,100 currently. It has added 55 percent in the last 1 year.
The surge in the stocks comes on the back of strong financial performance, robust track record, healthy store additions, a strong recovery from the impact of the pandemic and profitable diversifications in emerging categories.
In the December quarter, the net profit of the parent company of Westside reported a strong performance with its profit jumping 2.4 times over the pre-COVID levels on the back of strong revenue.
It reported a 79 percent YoY jump in Q3 standalone net profit to ₹199 crore while its revenue zoomed 85.8 percent YoY to ₹1,350 crore. The revenue rose as consumer sentiment continued to recover in 3QFY22 on a strong festive season. Compared to pre-COVID levels (3QFY20), revenue grew 55 percent.
The company also reduced its expenses to ₹1,383.62 crore in the quarter, compared to ₹3,175.07 crore in the same time last year.
In the quarter under review, Westside's same-store sales growth (SSSG) jumped 40 percent YoY and 9 percent from Pre-COVID levels.
"The company is likely to continue its stellar revenue growth trend on the back of aggressive footprint addition and strong customer reception, reflecting in its industry-leading SSSG," brokerage house Motilal Oswal said in an earnings review note.
Westside and Zudio added 6 and 30 stores, respectively in 3QFY22, reaching 197 and 177 stores each.
“While the Omicron wave impacted sales in January, it was mitigated in part by the strong online traction for Westside and the recovery in the last fortnight has been encouraging,” the firm stated in the earnings release.
Speaking post-earnings, Noel N Tata, Chairman, Trent Ltd said, “The third quarter witnessed a strong business rebound and we have been pleasantly encouraged by the rapid recovery in customer offtake. In many ways, the playout in Q3 is indicative of the performance potential of our brands, both in terms of growth as well as profitability."
He added, "our prospects remain robust owing to an accelerating shift to branded products, the emergence of digital/ seamless channels of engagement and a growing appetite for aspirational yet strong value propositions."
ICICI Securities is bullish on Trent given the company’s strong track record of execution. However, it sees extended lockdowns and lower discretionary spending as key risks.