Trent Q3 Results Review - Outstanding Performance: Axis Securities

Axis Securities Report

Trent Ltd.'s Q3 FY23 print was better than our expectations. It maintained its strong revenue growth momentum, up 61% YoY (36% on a three-year compound annual growth rate basis) to Rs 2172 crore led by increased footfalls, strong growth across emerging categories (including beauty, personal care innerwear, and footwear) and continued thrust on store expansion.

Ebitda grew 15% YoY (25% three-year CAGR), while Ebitda margins at 15.5% declined by 620 basis points YoY due to gross margin pressure – higher raw material and increased mix of low margin Zudio portfolio coupled with higher operating expenses. Profit after tax stood at Rs 161 crore, up 21% YoY.

Gunning on omni-channel strategy, online revenues through Westside.com, Tatacliq and Tata Neu contributed ~6% of Westside revenues; moreover, it will continue to invest across the chain to make it commensurate with the growing scale and the growth agenda. 

We believe Trent’s overall results are outstanding in terms of topline growth and we expect strong traction is likely to continue in the coming quarters as well.

The company’s focus on store expansion and refreshing stores with fresh assortments will lead the overall future growth across store formats.

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