Trent Ltd’s share price fell over 6% despite an 11% profit increase. Analysts attribute the drop to slowing sales momentum, as profit growth was driven by cost controls, not strong sales.
In a surprising turn, shares of Tata Group’s retail arm Trent Ltd plunged over 6% on Monday (November 10), touching a fresh 52-week low, even as the company reported a healthy jump in profit for the September quarter.
The stock fell as much as 6.8% to Rs 4,310 on the BSE, despite Trent posting a 16% year-on-year rise in revenue and an 11% increase in net profit for Q2 FY26. Analysts say that while the topline growth looked strong on paper, there were red flags beneath the surface, particularly concerning store productivity and slowing sales momentum.
What’s Behind the Fall?
Brokerages pointed out that the company’s earnings growth was largely driven by tight cost control, not by a substantial increase in sales performance. While Trent expanded aggressively, with a 43% YoY rise in retail area, this was offset by a 17% YoY decline in revenue per square foot, indicating possible sales cannibalisation between stores.
“The growth momentum has slowed because new stores, especially in Tier-2 markets, take longer to turn profitable,” analysts at Nuvama Research observed. They noted that while profitability was supported by cost-cutting, productivity at the store level has weakened.
Analysts’ Take: Mixed Signals
In response, several brokerages trimmed their earnings estimates for the coming years.
Nuvama Research revised its FY26 revenue, EBITDA, and PAT estimates downward by up to 9.5%, slashing its target price from Rs 5,850 to Rs 5,189, though it maintained a ‘Hold’ rating.
Motilal Oswal Financial Services (MOSL), however, remained optimistic, reiterating a ‘Buy’ rating with a target price of Rs 6,000. MOSL expects Trent’s cost-saving initiatives and expansion into categories like beauty, innerwear, and footwear to support long-term growth, but cautioned that “revenue acceleration remains a key trigger.”
Despite the sell-off, analysts still view Trent as a strong retail growth story within the Tata Group portfolio. The short-term correction, they say, reflects profit-taking and tempered expectations, rather than a fundamental shift in the company’s prospects.