Mumbai: At the company’s Annual General Meeting (AGM) on July 3, Tata Group’s retail arm Trent has forecasted its CAGR for 2025-26 to be around 20% as against its 5-year average of 35% from 2020 onwards. After this news broke, Trent shares have witnessed a 9% fall in early morning trades on July 4, sparking concerns about the company’s long-term prospects.
During the AGM, the company showcased its ambition to scale its revenue by 10x, explaining how the company’s revenue had already doubled when the goal was set in FY23. The company operates in various retail formats, including fashion, retail, electronics and others through its more than 1000 stores across the country.
The company has been a stock market darling for a long time, especially since its price has consistently risen from Rs.123 in June 2015 to Rs.5,732.5 on July 4, an almost 4,600% rise. Investors have also appreciated the company’s consistent dividend payouts over the years, with a Rs.5 per share final dividend declared for FY2024-25. However, many analysts have been concerned about the company’s prospects lately, with brokerage firms like Nuvama cuttings its revenue growth estimates by 5% for the next 2 years. They also don’t think Trent’s target of 25% CAGR is sustainable as per the current run rates, especially as heightened competition and a lower disposable income continue to stall demand.
Trent’s various brands mainly compete with Reliance Retail in the organised retail segment, even as both have brands that compete directly against each other. Though Reliance Retail has an upper hand, Trent is credited with creating brands that meet the demands of various price segments, even though Reliance has better visibility through the digital medium.
A report by Wazir Advisors estimates that India’s retail market is expected to surge to $170 billion by 2026, excluding food and grocery. The segment is expected to grow at 15% CAGR, offering immense scope for expansion.
