Trent Ltd. reported a robust 16% year-on-year revenue growth in Q3 FY26. ICICI Securities maintained its 'Add' rating, citing strong margin expansion driven by operational efficiencies and product mix, despite heightened competition. The brokerage anticipates normalisation in like-for-like growth to mid-single digits, with improved profitability supporting earnings.
Strong Revenue and Margin Performance
Trent Ltd. posted a significant standalone revenue increase of 16% year-on-year for the third quarter of fiscal year 2026. This performance reinforces brokerage expectations for 18-20% medium-term sales growth, even against a challenging comparative base. A potential catalyst for investor sentiment could be Trent surpassing 20% revenue growth, buoyed by reduced competition or a stronger demand uptick.
Normalizing Like-for-Like Growth and Profitability Focus
While like-for-like (LFL) growth in Trent's fashion formats saw a marginal dip in Q3 FY26, primarily due to an advanced festive season shifting to Q2, this trend is expected to normalize. ICICI Securities anticipates LFL performance to improve to mid-single-digit levels in coming quarters. Profitability emerged as a key strength, with superior product mix, stringent cost controls, and operational efficiencies driving margin expansion amidst a competitive, discount-heavy environment. Although medium-term revenue growth may stabilize around 18%, sustained higher profitability is set to bolster earnings.
Brokerage Maintains 'Add' Rating
ICICI Securities reaffirmed its 'Add' rating on Trent shares. The brokerage highlights a healthy growth runway, underpinned by disciplined execution and improving operating metrics. However, potential downside risks include slower-than-anticipated discretionary consumption, increased competitive intensity from rivals like Reliance Trends and Max, and execution challenges in newer formats such as Zudio. Upside potential hinges on the success of Zudio and other pilot ventures.
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