Whalesbook
Growth Concerns Deepen
Trent Limited, the standout laggard of the Nifty50 in 2025, began the new year with further declines. Its stock has plummeted 40% over the past year and shed an additional 7% in early 2026. Investors are increasingly wary of moderating sales growth on an elevated base, compounded by tepid consumer demand and intense competition.
Q3 Performance Disappoints
The company's recently released December quarter (Q3FY26) business update offered little solace. Trent reported a 17% year-on-year decline in standalone revenue growth. While this represents a stabilization compared to the fifth consecutive quarterly decline seen in Q2FY26, it fell short of broader market expectations. Analysts had anticipated around 20% growth.
Analyst Outlook Mixed
Bernstein analysts noted in a January 6 report that Trent's Q3 growth was below their expectations, though they suggested revenue growth may have "found bottom." However, they deemed it "highly unlikely" that Trent could achieve the 33% growth needed in Q4FY26 to meet its full-year projections. Motilal Oswal Financial Services echoed concerns, highlighting that revenue growth was largely driven by store count expansion, with revenue per store declining approximately 11% year-on-year.
Store Expansion Continues
Despite the sales performance, Trent continued its aggressive store expansion. In the last quarter, the company opened 17 new Westside stores and 48 Zudio stores, bringing the total count to 278 and 854, respectively. These additions will be closely monitored by investors as a key driver for future growth.
Near-Term Outlook Grim
Little immediate respite appears on the horizon for Trent's stock. Weaker-than-expected Q3 performance is likely to trigger earnings downgrades. Margins will be a key focus when Q3 results are officially announced, but the stock's long-term trajectory remains heavily dependent on a significant and sustained revival in growth.