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Trent's Q2 margin, growth bring cheer. Can it sustain the momentum?

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In short

The retail major posted a 22.5% increase in total revenue to ₹5,788 crore during the September quarter, supported by mid-single-digit like-for-like fashion growth. Profitability improved concurrently, with standalone Ebitda margins advancing 99 basis points to reach 18.2%. The business also benefited from robust traction across non-apparel lines, including footwear, innerwear, and beauty and personal care. To maintain this performance against inflation, management is focusing on sourcing efficiencies and wider supplier partnerships.

Key points

  • Store footprint expansion continues to serve as a primary operational catalyst for overal…: Store footprint expansion continues to serve as a primary operational catalyst for overall business expansion.
  • Management is heavily targeting tier-II cities and peripheral regions for new discount fa…: Management is heavily targeting tier-II cities and peripheral regions for new discount fashion store rollouts.
  • Slower sales growth and mounting retail competition remain notable downside risks highlig…: Slower sales growth and mounting retail competition remain notable downside risks highlighted by market brokerages.

Sources checked by our analysis pipeline: 1

Trent Ltd's shares were trading 6% higher on Friday after the September quarter (Q2FY27) results showed some bright spots. First, the retailer’s like-for-like growth for its fashion portfolio stood at mid-single digits in Q2, an improvement from a low-single digit growth in Q1. The pick-up in like-for-like growth is encouraging as broader demand trends are still largely subdued. Also, the festive season has shifted to Q3 this year. Of course, investors will watch if higher like-for-like growth sustains.

Secondly, standalone Ebitda margin expanded by 99 basis points year-on-year to 18.2%. Ebitda is a key measure of profitability and is short for earnings before interest, taxes, depreciation and amortization. This comes in the backdrop of elevated inflation. “The volatile geopolitical circumstances, interest rate trends and supply-chain disruptions continue to contribute to this playout,” said the company's Q2 investor presentation.

Margin expansion meant Trent’s Ebitda increased by almost 30% year-on-year, faster than the 22.5% growth in revenues to ₹5,788 crore. The Westside format is estimated to have delivered a better same-store sales growth. Emerging categories, including beauty & personal care, innerwear and…

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