Trent shares have fallen sharply by 3.2% to ₹3,008 on Friday, down ₹99.50 from Thursday's close of ₹3,107, despite the company reporting stronger-than-expected Q1 FY27 results. The stock's decline came as sell orders outnumbered buys by nearly two to one, with 66% of order flow on the sell side, according to The Hindu BusinessLine. Traded value stood at around ₹459 crore by early afternoon, reflecting mixed investor sentiment following the earnings announcement. The retailer's impressive margin performance and continued expansion strategy have attracted positive brokerage commentary, though investors appear to be taking a more cautious stance on the results. Trent said disruptions in the Middle East could impact supply chains, commodity prices and inflation, potentially affecting demand in the coming quarters. The company also noted that consumer sentiment remained broadly stable despite elevated geopolitical uncertainty, with discretionary spending continuing to be measured as households prioritise value, quality, and convenience.
Trent Ltd announced its June quarter (Q1 FY27) earnings on Thursday, August 6, 2026, with the company reporting a 22% year-on-year rise in consolidated net profit to ₹519 crore for the quarter ended June 30, 2026. However, the Tata Group-backed retailer's performance fell short of market expectations, with consolidated net profit missing analysts' expectations of ₹530 crore. According to Business Standard, the retailer had posted a profit of ₹423 crore in the year-ago period, demonstrating strong sequential growth. The company's profit before exceptional items and tax standing at ₹702 crore, up 26% from ₹555 crore in the same quarter last year. Revenue from operations grew 18% YoY to ₹5,755 crore, though this missed the Bloomberg consensus estimate of ₹5,870 crore. Revenue from operations grew 18.5% YoY to ₹5,755 crore during the reporting quarter, while profit before tax rose 22% to ₹691.84 crore from ₹564.69 crore. On a sequential basis, net profit increased 25% from ₹413 crore in the March quarter, while revenue rose 14% from ₹5,028 crore in the previous quarter.
The latest results showcase Trent's strong operational efficiency with standalone EBITDA surging 33% to ₹847 crore with margins expanding 208 basis points to 19.6%, as reported by The Hindu BusinessLine. This significant improvement in EBITDA margin demonstrates the company's ability to optimize its cost structure and operational efficiency. The retailer's gross margins came in at 46.6%, up 149 basis points year-on-year, surprising most brokerages on the upside. The margin performance continues to exceed market expectations, with CNBC-TV18 poll estimates projecting EBITDA margin at 17.8%, highlighting the company's operational excellence. EBITDA jumped 32.5% to ₹1,110 crore, comfortably beating the Street estimate of ₹1,010 crore, according to NDTV Profit. HSBC noted that EBITDA exceeded its estimates by around 10%, driven by stronger gross margins, likely reflecting the lagged benefit of lower raw material costs. The brokerage said Q1FY27 EBITDA margin came in well ahead of expectations, supported by year-on-year gross margin expansion, while EBITDA growth remained strong despite higher depreciation weighing on profit before tax.
Brokerages have responded positively to Trent's strong Q1 performance, with multiple firms raising their price targets and maintaining bullish ratings. Morgan Stanley maintained Overweight and raised its 12-month target price to ₹3,406, implying an upside of 15.2% from the current market price of ₹3,008. The brokerage said EBITDA came in 19% ahead of its estimates, driven by a 149-basis-point expansion in gross margins and rental and occupancy savings. Macquarie retained its 'Outperform' rating with a target price of ₹3,600, implying an upside of 18.7%, noting that first-quarter EBITDA exceeded both its estimates and Street expectations. Bernstein reiterated its 'Outperform' rating with a price target of ₹3,500, indicating an upside potential of 15.4%, while HSBC maintained its 'Buy' rating and increased its target price to ₹3,390 from ₹3,370, implying an upside of 11.8%. However, Jefferies maintained a more cautious stance with a 'Hold' rating and target price of ₹3,435, implying an upside of 13.3%, citing concerns over demand visibility and input cost inflation despite acknowledging the strong quarter performance. Citi held its Sell rating with a target of ₹2,950, arguing that while margins have surprised, an acceleration in revenue growth is needed to justify current valuation multiples.
The company's performance was significantly boosted by emerging categories, including beauty & personal care, innerwear and footwear, which contributed more than 21% of fashion revenues during the quarter. Trent also reported strong digital growth with Westside's online business, together with its offering on the Tata Neu platform, continued to gain traction, with online sales accounting for over 6% of Westside's revenue. The company's Star grocery business reported revenue of ₹885 crore with 86 operating stores, demonstrating diversification beyond fashion retail. The company's operating EBITDA increased 36% YoY to ₹847 crore, driven by healthy operating leverage, while operating EBIT margin improved to 12.9% in Q1 FY27 from 11.5% in the year-ago quarter. However, like-for-like growth in the fashion business remained in the low single digits, indicating that revenue growth continued to be driven primarily by new store additions rather than higher productivity at existing outlets. Management noted that consumer demand remains stable, although discretionary spending is "measured rather than exuberant".
The company has significantly accelerated its expansion strategy, ending June 2026 with 1,312 stores across 330 cities, compared to 1,043 stores in 242 cities a year earlier. In Q1, Trent opened one Westside and 22 Zudio stores on net basis, consolidating three Zudio stores, and expanded its presence to nine new cities. As of June 2026, its store portfolio comprised 301 Westside stores, 982 Zudio stores (including seven in the UAE), and 29 stores across other lifestyle concepts, with a retail footprint of over 18 million sq ft across its fashion brands. More than 80% of new Zudio stores opened during the quarter were in tier II and tier III cities and peripheral growth markets, reflecting the company's strategy of expanding beyond metros. The company noted it was "adopting a range of interventions" in sourcing and prices as costs of some inputs had risen in recent months, while acknowledging that prolonged disruptions in the Middle East could affect supply chains. SBI Securities noted that the Star food and grocery business grew 8.7% to ₹885 crore with own brands contributing over 73% to its revenues.
