Shares of Trent, the prominent Tata group retailer, could face a correction following its Q1 provisional revenue growth falling below analyst expectations. Motilal Oswal Financial Services (MOFSL) highlighted that the 19% year-on-year (YoY) revenue increase for the quarter ended June 2026 was less than their 22% estimate.
Q1 Performance Falls Short
MOFSL reported that Trent's Q1 standalone revenue reached approximately Rs 5,666 crore. This 19% YoY growth contrasts with the brokerage's prior forecast, which had anticipated a stronger performance. The discrepancy comes after Trent had delivered a 20% YoY growth in the preceding March quarter.
The stock has seen a significant rally recently, climbing 23% over the past month and 50% from its March 2026 lows. This surge was fueled by expectations of accelerated revenue growth, which the latest Q1 update did not fully meet.
Store Expansion vs. Revenue Per Store
While revenue from product sales, net of GST, grew by 19% YoY, MOFSL noted that this growth was primarily driven by a 26% YoY increase in store count. Crucially, revenue per store declined by 5% YoY in Q1, following a 4% YoY decline in the March quarter.
- Total Fashion Format Stores: Increased by 26% YoY to 1,312.
- Westside: Added one net store, reaching 301 stores (up 21% YoY).
- Zudio: Opened 19 net stores, expanding to 982 stores (up 28% YoY).
This trend suggests either a slower ramp-up for newer stores or a continuing cannibalization effect on existing outlets.
Analyst Outlook and Potential Correction
MOFSL emphasized that Trent's stock price appreciation in recent weeks was largely in anticipation of further revenue acceleration. Given the weaker 19% YoY revenue growth, the brokerage believes a correction in the stock price is likely.
"Trent’s stock price has rallied in the past few weeks in anticipation of further acceleration in revenue growth. In this context, the 19 per cent YoY revenue growth is weaker and would likely lead to correction in the stock," MOFSL stated in its note.
Earlier, MOFSL had projected 22% revenue growth for Q1, driven by store additions and recovery in same-store sales. They also expected stable gross margins and a 50 basis points improvement in operating margins due to operating leverage, alongside a 25% YoY EBITDA growth and 19% YoY profit after tax increase. The actual Q1 figures diverge from these optimistic forecasts.