This RK Damani stock holds superior;  Analysts see up to 36% increase

This RK Damani stock holds superior; Analysts see up to 36% increase – Mail Bonus

The company Tata Group recently published its annual report, which indicated that the retailer is pushing hard for growth, at any cost.

The stock has performed exceptionally well over the past five years, yielding almost a 35 percent compound return annually. Some brokers see up to 36 percent further increase in Trent. This is despite some concerns about slowing down demand in the near future in category 2-3.

Radhakishan Damani, through its investment arm, Derive Trading And Resorts, owned a 1.52 percent stake in the retailer on March 31. Amansa Holdings, led by Akash Prakash, also owned a 2.26 percent stake in Tata Group



Trent generates 72 percent of its revenue from ‘Westside’ and the rest from Zudio. It also operates Star Bazar and Indian fashion brand Zara through JV.

“Strong performance in challenging times and industry-leading performance will continue to justify a valuation of Trent. We maintain our BUY stock rating,” ICICIdirect said in a comment. This brokerage has a target of Rs 1,470 on the shares.

The main triggers for the share price increase include trading additions, a strong performance by Zudio and a strong liquidity position.

The company added 125 stores to FY22 across Westside and Zudio, bringing the total to 435 stores on FY22, which exceeds the 425 store management guidelines.

Axis Securities in a recent comment expected that Trent would continue its expansion efforts, in light of plans to build 135 stores each on FY23 and FY24 to take advantage of strong demand prospects.

ICICIdirect said it expects 215 trade additions between Westside and Zudio for FY23-24.

“Liquidity is still strong with cash and investments worth Rs 600 plus million, which allows it to flow over the current situation better than its peers. Zudio continues to be Trent’s growth leader. We expect its revenue to grow by 48 CAGR percent in “FY22-24. In the long run, the company aims to increase its CAGR revenue by 25 percent plus,” said ICICIdirect.

aims for a 37 percent increase in income over FY22-24, which it believes justifies an overvalue for the share.

Among the highlights of the annual report, analysts point out that Zudio continues to be the fastest growing fashion brand in India with revenues over Rs 1,000 million on FY22. By reaching the benchmark, the EBIT margin increased to 6 percent on FY22 from almost 1 percent on FY21.

In Westside’s case, sales exceeded Covid’s threshold from H2FY22 and continued with positive sales growth in the same store (SSSG). The gross income of FY22 for this format amounted to 2,900 million rupees.

Analysts said that Zara India reported 61 percent growth in the line over the year, which was 115 percent for Covid, despite silent additions to the store. That said, Star Bazar’s losses increased between years, mainly due to higher discounts and sharper pricing

Motilal Oswal said Zudio’s revenue more than doubled on FY22 from FY20 levels, despite the detrimental effects of the pandemic. The same should grow three times over the next two years to 3,300 million rupees.

“Our channel surveys indicate that the six-month-old Zudio stores are generating annual revenues of 10 million rupees, ie 14-15 thousand rupees per square foot, almost 20-30 percent more than stores of a similar size. “In addition, FY23E has 200 retail additions. In addition, Utsa, which caters to women’s national clothing, now has six stores and is still one of the company’s growth drivers,” said Motilal.

This broker has assigned 31 times the FY24 EV / Ebitda valuation to independent companies (Westside and Zudio), 1 times the EV / sales valuation to Star Bazaar and 15 times the EV / Ebitda valuation to Zara to achieve a revised target of Rs. 1,430 from Rs 1,180 earlier.

Phillip Capital estimates that the shares are worth 1,379 Rs. Axis Securities has a target of 1,180 Rs on the table.

The share exchange was at 1,063.80 rupees each on Friday and the targets indicate a 9-36 percent increase.

(Disclaimer: Advice, suggestions, opinions and opinions given by experts are their own. This does not represent the views of the Economic Times)

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