TRENT - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.6

🛍️ Fundamental Analysis of TRENT Ltd. (Tata Group Retail Arm)

✅ Strengths

Exceptional Capital Efficiency

ROCE: 30.7% and ROE: 30.1% — elite-level returns, especially in retail

EPS: ₹43.5 — strong earnings base

Debt-to-Equity: 0.41 — moderate leverage, manageable

Growth Potential

PEG Ratio: 0.52 — undervalued relative to growth

DII Holding ↑ 1.22% — domestic institutions showing confidence

Brand & Market Position

TRENT operates Westside, Zudio, and other fast-growing formats

Strong execution and expansion strategy in Tier 2/3 cities

⚠️ Concerns

Valuation Excess

P/E: 124 vs Industry PE: 47.6 — extremely expensive

Book Value: ₹154 vs Price: ₹5,002 — ~32x book, very stretched

Weak Dividend Yield: 0.10% — negligible income for long-term holders

Technical Weakness

RSI: 28.1 — oversold zone

MACD: -174 — deep bearish momentum

Price below DMA 50 & DMA 200 — short-term downtrend

FII Sentiment: -1.26% — foreign investors trimming exposure

Quarterly Profit Decline: ₹312 Cr vs ₹497 Cr — 37% drop

📉 Valuation & Ideal Entry Zone

Given the steep correction and technical indicators

Ideal Entry Zone: ₹4,400–₹4,700

Near recent low of ₹4,488

RSI suggests oversold, potential bounce

Wait for MACD reversal or price reclaiming DMA 50 for confirmation

🧭 Long-Term Investment Outlook

TRENT is a premium retail play with strong brand equity and capital efficiency. However, the valuation is extremely rich, and recent earnings softness raises caution.

Holding Period: 3–5 years

Suitable for investors with high risk tolerance and long-term view

Expect volatility due to valuation compression and retail cyclicality

🚪 Exit Strategy (If Already Holding)

Partial Exit Zone: ₹6,500–₹7,000

If price rebounds toward previous highs and valuation peaks

Full Exit

If ROE drops below 20%

If PEG rises above 1.2 without EPS growth

If price fails to reclaim ₹5,500 (DMA 50) over 2–3 quarters

Reinvest: Only if valuation normalizes and earnings growth resumes

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