The Tata Group retailing arm, Trent Limited, has reported a 36% growth in topline. However, lower other income and higher taxes during the quarter resulted in a marginal 2% dip in net profits of the company. Operationally, the performance is better than what was reported in June quarter 2002.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Prior period items
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Diluted Earnings per share*
Current P/e ratio (incl. extraordinary items)
In June quarter, Trent saw a topline growth of 13% in value terms and 25% in volume terms. Had it not been for the interest on income tax refund (Rs 38 m) and the write back of tax provisions of earlier years (Rs 69 m), Trent would have finished the June quarter with a Rs 15 m net loss. Compared to this, in September quarter, Trent recorded 41% growth in retail sales. Also, due to the sales growing at a faster clip than operating costs, Trent's operating profits improved significantly during the September quarter.
Purchase of finished goods
Trent plans to take its tally of 'Westside' stores to 20 in the next three years. This will aid the company's topline growth in the future and help it attain a critical mass. Higher topline is likely to give it economies of scale and help it plan its supply chain even better. However, that's in the long term. In the short term, Trent is likely to continue facing difficult conditions due to the overall competitiveness in the market.
At Rs 165 the stock trades at a P/E of 9.1x its annualised 1HFY03 earnings. But if we exclude the extraordinary income of Rs 69 m from its numbers in 1HFY03, the valuation shoots up to 22x 1HFY03 annualised earnings. Though the stock has seen institutional interest in the recent past, a 22x P/E is quite high in our view for the medium term.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407