The decline was driven mainly by disappointing growth guidance provided by the company’s management during its Annual General Meeting (AGM).
Here are the key reasons in detail:
1️⃣ Underwhelming Growth Guidance
- In the AGM, Trent disclosed that its standalone sales for the April–June quarter (Q1 FY26) grew 20% year-on-year.
- While 20% growth sounds healthy, it is much slower compared to the company’s historical growth trajectory:
- Between FY2020 and FY2025, Trent achieved an impressive 35% compound annual growth rate (CAGR).
- Management had earlier set an aspiration of maintaining at least 25% annual growth going forward.
- Therefore, the latest update fell well short of both historical performance and future ambitions.
This moderation disappointed investors who had come to expect rapid expansion, especially given Trent’s aggressive store rollouts and category additions (like Zudio and Westside).
2️⃣ Broker Downgrades & Lower Estimates
- Nuvama Institutional Equities, a leading brokerage, reacted swiftly to the update:
- Downgraded Trent’s stock rating from “Buy” to “Hold.”
- Slashed the target price from ₹6,627 to ₹5,884.
- Nuvama also cut its financial projections for the company:
- Revenue estimates for FY26 and FY27 were lowered by 5–6%.
- EBITDA (operating profit) forecasts were reduced by 9–12%.
This downgrade added to negative sentiment and triggered heavy selling, especially among institutional investors who hold significant positions in the stock.
3️⃣ Valuation Concerns
- Even before this correction, Trent was trading at rich valuations due to its exceptional growth record and brand strength.
- The sharp deceleration in sales growth raises doubts over whether the premium valuation is justified in the near term.
- As a result, investors rushed to lock in profits, leading to a steep intraday fall.
🛒 A Quick Look at Trent’s Business
Trent operates some of India’s fastest-growing retail brands:
- Zudio: Affordable fashion targeting mass-market consumers.
- Westside: Mid-to-premium apparel and lifestyle stores.
- Star Bazaar: Hypermarket chain selling groceries and daily essentials.
In recent years, Zudio’s aggressive expansion (especially in Tier 2 and Tier 3 cities) has driven stellar growth, making Trent a favorite among growth investors.
📊 Market Reaction Today
| 📈 Details | Data |
|---|---|
| Intraday Decline | Over 10% |
| Closing Loss | Nearly 9% |
| Closing Price | ~₹5,652 per share |
| Position in Nifty 50 | Biggest loser of the day |
| Nuvama New Target Price | ₹5,884 |
| Earlier Target Price | ₹6,627 |
🔭 What Should Investors Watch Next?
If you hold or plan to invest in Trent, here are the key factors to track going forward:
✅ Q1 FY26 detailed results—to see if there is more weakness or if this is just a temporary moderation.
✅ Management commentary on demand trends—especially in discretionary spending categories like apparel.
✅ Store expansion plans—the company still plans to add 250+ new stores in FY26, which could revive growth.
✅ Peer performance—how competitors like V-Mart and Shoppers Stop are faring in the same environment.
✨ Conclusion
While Trent remains a strong retail brand with ambitious long-term goals, today’s sell-off shows that lofty valuations leave little room for growth disappointments.
Investors should be cautious and monitor the next earnings reports closely before making fresh commitments.
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