Trent Shares Slide After AGM Growth Warning and Nuvama Downgrade

Trent Shares Slide After AGM: Shares of Trent Ltd., a Tata Group retail company, fell sharply by 9% on Friday, July 4, 2025, following a cautious outlook shared during its Annual General Meeting (AGM). The company signaled slower revenue growth for the first quarter of FY26, prompting brokerage firm Nuvama Institutional Equities to downgrade the stock and revise its financial projections.

AGM Highlights and Growth Concerns

At its 73rd AGM, Trent’s management projected a revenue growth of around 20% for Q1 FY26 in its core fashion business, a notable slowdown from the 35% compound annual growth rate (CAGR) achieved over FY20–25. Previously, at an analyst meet, the company had indicated that a 25% revenue CAGR was sustainable over the long term. However, the current guidance falls short of this target, raising concerns about near-term performance.

Despite the softer outlook, Trent remains optimistic about its long-term goals. The company aims to achieve a tenfold revenue increase from FY23 levels, driven by aggressive expansion plans, including the addition of approximately 250 stores across its formats in FY26. Management also highlighted the potential of newer ventures like Zudio Beauty and Star Bazaar, with the latter seen as a future growth driver that could surpass flagship brands like Westside and Zudio.

Nuvama’s Downgrade and Revised Targets

Nuvama Institutional Equities downgraded Trent to a “Hold” rating from its earlier “Buy” recommendation, citing the slower-than-expected growth trajectory and stretched valuations. The brokerage cut its revenue estimates for FY26 and FY27 by 5% and 6%, respectively, and reduced its Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) estimates by 9% and 12% for the same period. Consequently, Nuvama lowered its price target to ₹5,884 from ₹6,627, implying limited upside from current levels.

While acknowledging Trent’s strong execution track record, Nuvama noted that the stock’s current valuation is demanding, given the near-term growth challenges. However, the brokerage remains positive about long-term prospects, particularly with the potential scale-up of Zudio Beauty and Star Bazaar once these ventures stabilize.

Market Reaction and Stock Performance

Trent’s shares opened at ₹5,675 on July 4, 2025, down 9% from the previous close, reflecting investor concerns over the revised growth outlook. The stock has faced volatility in recent months, with a 20% decline over the past six months, despite earlier bullish calls from brokerages like Morgan Stanley and Citi. This follows a previous 18% crash in April 2025 after a disappointing Q4 update, which erased over ₹30,000 crore in market capitalization.

Future Growth Drivers

Despite near-term headwinds, Trent’s management remains confident in its expansion strategy. The addition of 250 stores in FY26 and the focus on new categories like Zudio Beauty are expected to drive growth over time. Star Bazaar, in particular, is seen as a high-potential business, given the size of India’s food retail market. Nuvama highlighted that a significant ramp-up in these segments could serve as an upside risk to its projections.

Investor Takeaway

Trent’s ambitious long-term vision and robust expansion plans continue to inspire confidence, but the near-term slowdown in its core fashion business has tempered expectations. Investors are advised to monitor the stabilization and scaling of newer ventures like Zudio Beauty and Star Bazaar, which could unlock significant value in the future. For now, the stock’s high valuation and slower growth outlook suggest caution.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Stock market investments are subject to market risks. Always conduct thorough research or consult a financial advisor before making investment decisions.

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