FY2020-21 AGM Update - Trent Ltd - ICICI Direct

We attended Trent's annual general meeting for FY20-21.

- Post lockdown relaxations, revenue recovery has been encouraging with July sales tracking significantly higher YoY. Currently 90%+ stores have resumed their operations

- In the long run, the company aims to grow its revenue at CAGR of 25%+

- Affirmed its aggressive store opening plans for its fashion format (Westside: 35 & Zudio: 75) in FY22 (outlined capex worth Rs. 200 crore in FY22E)

- Targeting online sales to reach 10% vs. current 5% over the next few years

- Despite pandemic challenges, Zudio exited FY21 with EBIT of Rs. 5 crore (vs. Rs. 8 crore in FY20). Zudio reported highest ever EBIT margins of 6% in H2FY21

- Westside reported sales decline of 43% YoY in FY21 with EBIT loss of Rs. 27 crore. Witnessed strong recovery in H2FY21 with EBIT margin of 9%

- Star Bazaar (grocery format) has progressed well in FY21 with the company gaining market share in the region in which it operates. StarQuik (online channel) performed exceptionally well with sales growing 124% YoY to Rs. 78 crore with average order value increasing 33% YoY to Rs. 1356

- Minimised discounting with lower EOSS days in FY21 (gross margin for Zudio, Westside improved 100 bps, 150 bps YoY to 40%, 58%, respectively

Key triggers for future price performance

- We pencil in 175 store additions between Westside and Zudio for FY22-23E

- Liquidity position remains robust with cash & investments worth Rs. 752 crore that will enable it to tide over the current situation better than peers

- Expect revenue recovery to pick up pace from H2FY22 onwards and model in revenue and earnings CAGR of 17% and 37%, respectively, in FY20-23E

For details, click on the link below: Link to the report

Shares of TRENT LTD. was last trading in BSE at Rs. 921.7 as compared to the previous close of Rs. 862.55. The total number of shares traded during the day was 126700 in over 5573 trades.

The stock hit an intraday high of Rs. 928 and intraday low of 864.4. The net turnover during the day was Rs. 114399122.

Source : Equity Bulls

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