Analysts at Motilal Oswal Financial Services Ltd (MOSL) retained the ‘buy’ recommendation on Tata Group’s retail arm Trent Ltd and projected up to 9% upside in the stock after the company management revealed the plans to drive growth.
MOSL has set a target price of ₹3,140 per share for Trent, which implies a potential upside of 9%, for the next 12 months.
After a management meeting, the brokerage stated that the retail company is evaluating formats that it can operate at a scale. Trent, which operates retail chain Westside, bookstore chain Landmark, and apparel chain Zudio, does not want the company to be only limited to these businesses. Trent is expecting its lifestyle and apparel brands Samoh and Utsa, and hypermarket and supermarket chain Star to be the next levers of growth, MOSL stated in a report.
However, the retail platforms will sell only their own brands, it said.
The new platforms will work on two guiding principles— the value category will be a key player in any new offering and it will try to keep women as the centre point of the product proposition.
The brokerage assigned an EV/EBITDA multiple, a ratio used to evaluate a company's value and performance, of 37x to the standalone business of Trent.
MOSL assigned EV/sales multiple of 2x to Star Bazaar while 15x EV/EBITDA to Zara by September 2025E.
The company reported consolidated revenues of ₹3,164 crore for the second quarter of this fiscal, up by 52% over ₹2081 crore in the year-ago quarter.
The stock was trading 0.19% higher at ₹2,886.30 apiece at 11.10am on December 12.
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(Edited by : Shloka Badkar)
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