Trent shares surge 12%: Why is Trent stock rising today?

Trent shares jumped nearly 12% in early trade on Tuesday after the Tata Group retail company reported strong revenue growth for the September quarter, prompting brokerages to turn more positive on the stock.

The stock was trading at Rs 2,877.70 at around 10:41 am, up Rs 302.70 or 11.76%, after opening at Rs 2,800. It hit an intraday high of Rs 2,901.20 and a low of Rs 2,781.10. The stock had closed at Rs 2,575 on Monday.

The sharp rally comes a day after Trent reported a 23% year-on-year increase in standalone revenue for the July-September quarter, with growth across its fashion and lifestyle businesses. Revenue from operations rose to Rs 5,788 crore from Rs 4,724 crore a year earlier.WHY ARE TRENT SHARES RISING?

The biggest trigger is the strong Q2 revenue performance.

Trent's revenue growth came in ahead of Goldman Sachs' estimates, while the brokerage also noted an improvement in sales productivity compared with the previous quarter. Goldman said the performance was strong considering the festive season came late in FY27.

The company also continued to expand its retail network. As of September 30, Trent operated 1,342 stores across Westside, Zudio and other lifestyle brands, compared with 1,101 stores a year earlier. During the September quarter, it added 17 Zudio stores and 10 Westside outlets.

That combination of revenue growth and store expansion has given investors confidence that Trent can continue to grow despite the pressure on discretionary spending.BROKERAGES TURN BULLISH

Brokerage commentary has added to the buying momentum.

Goldman Sachs raised its target price on Trent to Rs 3,010 from Rs 2,960 after saying Q2 revenue exceeded its estimates and sales productivity improved sequentially.

Macquarie expects the improvement in same-store sales growth to continue, while Citi said Trent's revenue per square foot declined at its slowest pace in five quarters.

The positive brokerage calls are important because Trent has been under pressure from concerns over slowing growth, competition and high valuations.BUT THERE ARE SOME WARNING SIGNS

The Q2 numbers are encouraging, but the rally does not mean all concerns around Trent have disappeared.

Goldman Sachs noted that sales per store fell 1.7% in Q2, although this was an improvement from the 5.6% decline in Q1.

Citi also sounded more cautious. While the brokerage sees scope for a further re-rating if revenue per square foot improves along with store expansion, it flagged weak revenue per square foot, increasing competition, cannibalisation between stores and the risk of margin pressure from higher input costs.

This is particularly important because Trent is expanding rapidly. The company added 250 stores across Westside and Zudio in FY26 and another 27 outlets in the September quarter.SHOULD YOU BUY TRENT SHARES?

For investors looking at the stock after today's 12% jump, the picture is mixed.

The positive case is clear: revenue growth remains strong, the store network is expanding and brokerages see room for further improvement in same-store sales and revenue productivity. Goldman Sachs' Rs 3,010 target is also above the current price of around Rs 2,878.

But investors also need to consider valuation and execution risks. The stock's PE has remained above 50 for the previous four trailing quarters, according to the market data shown in the screenshot. That means the market is already assigning a high valuation to Trent's earnings.

The stock also remains below its 52-week high of Rs 3,399.75, despite today's sharp move.

So, the Q2 update has strengthened the fundamental story, but today's 12% rally has also reduced the margin of safety for someone looking to enter immediately. The brokerage target from Goldman provides one positive reference point, but Citi's concerns around revenue per square foot, competition and margins show why investors should not look at revenue growth alone.

For existing shareholders, the Q2 numbers provide a positive signal, although valuation remains a key factor to watch. For fresh investors, chasing a stock after a near-12% single-day surge carries a different risk than buying after a correction.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends