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Trent: Growing with time - Views on News from Equitymaster
 
 
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  • Oct 27, 2000

    Trent: Growing with time

    The Tata Group's retailing arm, Trent Limited, has registered an encouraging 17% jump in its 2QFY01 turnover to Rs 123 m. However, a 45% decline in its other income has led to a staid 7% growth in its net profits.

    (Rs m) 2QFY00 2QFY01 Change 1HFY00 1HFY01 Change
    Sales 105 123 17.1% 208 251 20.7%
    Other Income 31 17 -45.2% 52 49 -5.8%
    Expenditure 98 101 3.1% 175 211 20.6%
    Operating Profit (EBDIT) 7 22 214.3% 33 40 21.2%
    Operating Profit Margin (%) 6.7% 17.9%   15.9% 15.9%  
    Interest (Net) 1 0 - 2 0 -
    Depreciation 5 5 0.0% 10 10 0.0%
    Profit before Tax 33 34 3.0% 74 79 6.8%
    Tax 4 3 -25.0% 9 7 -22.2%
    Profit after Tax/(Loss) 29 31 6.9% 65 72 10.8%
    Net profit margin (%) 27.6% 25.2%   31.3% 28.7%  
    No. of Shares (eoy) (m) 13.1 13.1   13.1 13.1  
    Earnings per share*       9.9 11.0  
    *(annualised)            
    Current P/e ratio         5.8  

    Trent is headed by Ms Simone Tata, who was earlier the head-honcho of cosmetics major Lakme Limited. After the Tatas' divested from Lakme in favour of Hindustan Lever Limited (HLL), the Group decided to invest in retailing.

    Intially, the company saw a huge proportion of income coming in as other income. The company received a lot of cash (Rs 6 bn) from HLL in lieu of Lakme. So Trent's huge other income was a result of interest the company received from the investments it made. But now the company's operations are picking up and the share of other income is going down.

    Trent owns the 'Westside' chain of stores. The company plans to increase the number of such stores to over 15 in the next one year. This again, is likely to see a surge in its topline and a further decline in its other income. As a result, the company's operating margins have more than doubled to 17.9%.

    On a half yearly basis, Trent's turnover has seen a surge of 21% over 1HFY00. Its profits have also grown by 11% during the period.

    The company's stock trades at Rs 64, at a P/e multiple of 5.8 times its annualised FY01 earnings.

     

     

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