Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Trent 4QFY21 Results Review - Surprises positively - HDFC Securities

Posted On: 2021-05-04 12:17:37 (Time Zone: UTC)


Mr. Jay Gandhi, Institutional Research Analyst, HDFC Securities

Trent's 4Q performance surprised positively. Standalone revenue grew 7% YoY to INR7.7bn (HSIE: 2.4%). Westside is estimated to have recovered base- line revenue (in-line), implying that Zudio overshot expectations. Bigger surprise was on GM recovery, which expanded 671bp YoY to 53.2% (HSIE: 47%). We suspect GM expansion was led by (1) write back of inventory provisions made in 1H and (2) better GMs in Zudio. 2H GM recoup helped Trent clock its typical annual GM (49.7%) in FY21. Costs continued to normalise; hence, EBITDAM beat lagged GM beat in 4Q. We revise our FY23 EBITDA estimates upwards (+9%) to account for higher EBITDAM (+100bp vs earlier). However, at 38x FY23 EV/EBITDA, there is no investment case. Maintain our SELL recommendation with an SOTP-based TP of INR 625/sh (implying 30x FY23 EV/EBITDA). Note: TP change largely mimics EPS change.

4QFY21 highlights: Revenue growth of 7% YoY (INR 7.74bn vs HSIE: INR 7.4bn) was better than expected. Westside recovered its base-line revenue (LTL growth: -4%; in-line), implying that Zudio overshot expectations. While recovery has been encouraging, management highlighted that revenue drop has been sharp post the 2nd round of lockdowns. GMs expanded 671bp YoY to 53.2% (HSIE: 47%), led by (1) write back of inventory provisions made in 1H and (2) better GMs for Zudio. 2H GM recoup helped Trent clock its typical annual GM (49.7%) in FY21. Costs continued to normalise; hence, EBITDAM beat lagged GM beat in 4Q. Adj. PBT/PAT stood at INR0.85/0.57bn respectively. Core CC cycle improved to 35 days in FY21 (39 days in FY20) - a rarity in the apparel space. Trent exited FY21 with 174/133 Westside/Zudio stores resp. Fit-outs for an additional 19/15 Westside/Zudio stores is complete and these stores would open once COVID-related restrictions are lifted.

Outlook: Trent's revenue and margin recovery have been encouraging. This, along with a disciplined handle on working capital and well-capitalised balance sheet (net cash position: INR 7.5bn) means we can't fault the business. However, valuations remain uncomfortably high (38x FY23 EV/EBITDA). Hence, we maintain our SELL recommendation on the stock with an SOTP-based TP of INR 625/sh (implying 30x FY23 EV/EBITDA).

Shares of TRENT LTD. was last trading in BSE at Rs.773 as compared to the previous close of Rs. 783.35. The total number of shares traded during the day was 23735 in over 1523 trades.

The stock hit an intraday high of Rs. 795 and intraday low of 772.5. The net turnover during the day was Rs. 18540900.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.


Other Headlines:

Maintain BUY on CreditAccess Grameen - Accelerated write-offs dents earnings - HDFC Securities

Sundram Fasteners Q4 Results Review - HDFC Securities

SRF - Specialty Chemicals continues to shine! - HDFC Securities

Realtors welcome RBI latest stance, expect relief initiatives in next announcement

CreditAccess Grameen - Q4FY21 Result Update - ICICI Securities

JM Financial - Exits FY21 with well contained stress pool; sequential AUM uptick encouraging - ICICI Securities

Hero MotoCorp - Margins remain resilient - ICICI Securities

CEAT - Margin pressures likely to intensify - ICICI Securities

SRF Limited - FY22E growth capped on higher plants utilisation - ICICI Securities

I-direct Instinct - Automotive Axles - ICICI Direct

Quant Pick - Axis Bank - ICICI Direct

Gladiator Stocks - Caplin Point Laboratories - ICICI Direct

Q4FY21 Result Update - Coforge Ltd - ICICI Direct

Tata Consumer Products - Q4FY21 First Cut - ICICI Direct

Coforge Ltd - Q4FY21 Result Update - YES Securities

CreditAccess Grameen - Q4FY21 Result Update - YES Securities

Blue Star - Q4 FY21 first cut - Inline performance - YES Securities

Tata Consumer - 4QFY21 results first cut - YES Securities

Tata Consumer 4QFY21 results first cut - YES Securities

Maintain BUY on CDSL - Strong growth momentum - HDFC Securities

Maintain ADD on L&T Infotech - Steady progression - HDFC Securities

Blue Dart Express - Q4FY21 - The bulge continues - ICICI Securities

Tata Steel - FY22E Net Debt/EBITDA at <1x - ICICI Securities

Larsen & Toubro Infotech - Consistency continues! - ICICI Securities

CEAT - Decent quarter; new capex likely to curtail FCF - ICICI Securities

Q4FY21 Result Update - Alembic Pharma - ICICI Direct

Gladiator Stocks - Cadila Healthcare - ICICI Direct

Q4FY21 Result Update - Larsen & Toubro Infotech - ICICI Direct

RBI Action Update - May 2021 - ICICI Direct

Quant Pick - Aurobindo Pharma - ICICI Direct

Q4FY21 Result Update - Greaves Cotton - ICICI Direct

Adani Total Gas Ltd - Q4FY21 Result Update - YES Securities

L&T Infotech - Q4FY21 Result Update - YES Securities

Bluedart Express - Q4 FY21 first cut - Miss on topline; Profitability improves - YES Securities

Views on the announcement by RBI Governor - Ms. Bekxy Kuriakose, Head - Fixed Income, Principal Asset Management

Views from experts on RBI announcement - May 5, 2021

Maintain REDUCE on RBL Bank - Elevated retail slippages continue - HDFC Securities

Resolution 2.0 measure by RBI to provide relief to real estate linked SME stakeholders

Godrej Properties - Robust quarter; positives fairly priced in - HDFC Securities

RBI Relief 2.0 - May 2021 - Acuité Ratings & Research

MDF Industry - Countervailing duty on MDF recommended; imports may get hit structurally - ICICI Securities

Home First Finance Company - Core earnings steady; profitability buoyed by securitisation income - ICICI Securities

RBL Bank - Modest return profile in the interim; transitioning underway - ICICI Securities

Alembic Pharmaceuticals - US continues to be under pressure - ICICI Securities

Q4FY21 Result Update - SBI Life Insurance - ICICI Direct

Q1CY21 Result Update - Varun Beverages - ICICI Direct

RBL Bank: Views from leading research houses on Q4FY21 results

Q4FY21 Result Update - Supreme Industries - ICICI Direct

Q4FY21 Result Update - Tata Chemicals - ICICI Direct

Larsen & Toubro Infotech - Q4FY21 First Cut - ICICI Direct


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020