Trent Q4 Preview: Up to 29% YoY rise in revenue expected. Margins could see contraction

Tata Group’s lifestyle & fashion company Trent will announce its earnings on Tuesday where the retailer is expected to report a net profit in a wide range between Rs 244 crore to Rs 462 crore in Q4FY25, according to estimates by four brokerages. The revenue from operations in the quarter under review is seen to grow around 29%, the estimates said.

The most conservative PAT figures have been given by Nuvama Institutional Equities while Equirus Securities has the most bullish estimates. While the former sees a 63% year-on-year decline in company’s profit after tax (PAT), the former has estimated a 35% YoY growth.

Views of Axis Securities and Mirae Asset Sharekhan have also been taken into account.

However, the revenue is expected to be in the range of Rs 4,079 crore and Rs 4,274 crore. Equirus has the most bullish estimates.

The company synonymous with brands like Zudio and Westside, will meet its store addition guidance while witnessing margin pressure due to product mix and an extended End-of-Season Sale (EOSS).

Here’s what brokerages recommend:

Nuvama

Trent’s core PAT is expected at Rs 244 crore, which could be a sharp decline of 63% YoY and 48% QoQ. Nuvama also expects Trent to report a revenue of Rs 4,092 crore for the quarter ended March 2025, marking a growth of 28.4% on a YoY basis. However, on a sequential basis, revenue declined by 9.8%, reflecting some slowdown compared to the December quarter.On the operating front, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) could come in at Rs 543 crore. This figure could be 14% higher than the same quarter last year, while going down 35% on a QoQ basis.

The EBITDA margin for the quarter is pegged at 13.3%, which may be lower by 170 bps YoY and 520 bps sequentially.

“Trent reported weak 28% growth for the quarter, and we estimate low single-digit LFL growth. This could be due to their strategy of increasing concentration in existing sub-markets. Store addition guidance has been met, with addition of 140 stores in Q4 and a total of 16/220 Westside/Zudio stores for the year. We anticipate some gross margin softness due to product mix and an extended End-of-Season Sale (EOSS), a first for Trent. Lower productivity is also expected to impact EBITDA margin,” Nuvama said in a note.

Trent remains its top pick.

Axis Securities

Axis has estimated a PAT of Rs 267 crore for the quarter ended March 2025, reflecting a sharp decline of 59.2% YoY and a sequential fall of 43.2% compared to the previous quarter on account of a one-time exceptional expense in the base quarter. The significant drop in PAT highlights profitability pressures despite strong revenue momentum.

Total revenue for the quarter is expected to stand at Rs 4,079 crore, registering a healthy growth of 28% on a YoY basis but falling by 10% compared to the December 2024 quarter.

At the operational level, the company’s EBITDA is pegged at Rs 599 crore. This marks an increase of 26% YoY while likely falling by 28.5% on a QoQ basis. Meanwhile the EBITDA margin for the quarter could be at 14.7%, down by 29 bps YoY and sharply lower by 379 bps on a QoQ basis.

The contraction in margins indicates rising cost pressures or lower operating leverage during the quarter, despite higher annual revenues.

“Healthy revenue growth is expected to continue on the back of store expansion. EBITDA margins are expected to increase on account of strong operating leverage,” this brokerage said.

The key monitorable would be demand outlook in metros/tier-2/3 towns ahead of festive season and store expansion guidance.

Sharekhan

Mirae Asset Sharekhan sees the company reporting an adjusted PAT of Rs 272 crore for the quarter ended March 2025, representing a marginal decline of 5.7% compared to the same quarter last year.

The net sales during the quarter is expected to rise sharply to Rs 4,079 crore, marking a 28% YoY growth.

Sharekhan expects the EBITDA margin at 14.8% in the quarter under review, compared to 15% in Q4FY24.

Sharekhan has a ‘Buy’ view on Trent for a price target Rs 6,609.

Equirus Securities

Equirus expects a PAT of Rs 462 crore, reflecting a 35% YoY growth and a 9.2% QoQ rise. Meanwhile, the net sales during the quarter could be around Rs 4,274 crore, representing a 29% YoY growth and a 5.9% QoQ increase.

The EBITDA of Rs 786 crore is seen in the January-March quarter rising by 26% YoY and 23% QoQ. The EBITDA margin for the quarter is seen at 18.4%, which may contract by 41 bps YoY and could improve 252 bps QoQ.

“Trent should continue its outperformance versus the industry delivering 39% kind of growth in 4Q led by surprisingly higher Zudio Store additions in 4Q. Margins to remain slightly impacted due to higher opex,” it said.

The key monitorables will be Same Store Sales Growth (SSSG) and operating margins.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)