Trent Share Price Falls 7% After Soft Q2 Results, Analysts Expect Slower Growth

The Trent share price dropped nearly 7% in recent trading sessions after the retail company reported weaker-than-expected results for the second quarter of FY2025. Despite strong momentum earlier this year, investors reacted sharply to signs of slowing sales growth and narrowing profit margins. 

Analysts now expect slower earnings growth for the coming quarters, with rising costs and a challenging retail environment adding further pressure.

Weak Q2 Results Shake Investor Confidence

Trent Ltd, a subsidiary of the Tata Group, reported a soft Q2 performance that fell short of market expectations. The company’s revenue growth slowed compared to the previous quarters, while its operating margins also faced compression due to higher input and rental costs.

According to the company’s filing with the Bombay Stock Exchange (BSE), Trent posted consolidated revenue of ₹3,434 crore for the quarter, marking a year-on-year increase of 16%. While growth remained positive, it was significantly lower than the 30%+ expansion the company recorded in the same period last year.

Net profit for the quarter came in at ₹246 crore, reflecting a decline of around 10% sequentially. The company attributed this to higher expenses linked to store expansion, logistics, and inflation-driven costs across supply chains.

Investors, who had priced in continued strong momentum, were quick to react. The Trent share price fell 7% on the National Stock Exchange (NSE), trading around ₹3,350 as of Friday’s closing bell.

Margins Under Pressure Amid Expansion Drive

Trent’s management highlighted that the company continues to focus on expanding its retail footprint across India. However, this growth push has come at the cost of reduced short-term profitability.

The company opened more than 40 new stores under its flagship brands Westside, Zudio, and Star Bazaar during the quarter. While this expansion strengthens Trent’s presence in Tier-2 and Tier-3 cities, the upfront costs of new leases, manpower, and inventory stocking have put downward pressure on operating margins.

Analysts at brokerage firm Motilal Oswal noted that Trent’s EBITDA margin contracted by nearly 90 basis points to 12.4% in Q2. They expect margins to remain under pressure in the near term as the company continues to scale operations.

Despite the near-term challenges, analysts remain optimistic about the company’s long-term growth strategy. Trent’s ability to create scalable fashion and retail formats, combined with strong brand loyalty, positions it well for sustainable expansion once macroeconomic pressures ease.

Analysts Expect Slower Growth Ahead

Following the quarterly results, several analysts revised their earnings forecasts for the company. Morgan Stanley and ICICI Securities both cut their earnings per share (EPS) estimates for FY2025 and FY2026, citing higher cost pressures and slower same-store sales growth.

While the company’s fundamentals remain solid, analysts now forecast a moderation in sales growth from 25% to around 15% for the next two quarters. The slowdown in discretionary spending, particularly in apparel and lifestyle categories, is expected to affect performance in the short term.

Moreover, the Indian retail market is seeing intense competition, especially in affordable fashion where brands like Reliance Trends, V-Mart, and Zudio are aggressively expanding. This could limit pricing flexibility and lead to further margin dilution.

Stock Research: Should Investors Worry About Trent’s Decline?

From a stock research perspective, the recent decline in the Trent share price does not necessarily signal a long-term reversal. The stock has been one of the best performers in India’s retail sector, delivering over 150% returns in the last two years.

However, analysts caution that valuations are stretched. Even after the recent correction, Trent continues to trade at over 70 times its FY2025 estimated earnings—well above the sector average. This leaves limited room for disappointment, making the stock vulnerable to short-term volatility.

That said, Trent’s strong fundamentals, solid brand portfolio, and operational discipline continue to attract institutional investors. The company’s focus on fast-fashion through Zudio and premium retail through Westside provides a balanced mix of affordability and aspiration, catering to diverse consumer segments.

Broader Market Context

The decline in the Trent share price also reflects a broader sentiment shift in the Indian stock market. Retail and consumer discretionary stocks have faced increased scrutiny amid rising interest rates, inflation, and changing consumer behavior.

According to NSE data, the Nifty Retail Index has declined around 4% over the past month, underperforming the benchmark Nifty 50, which remained largely flat. Investors are turning cautious on high-valuation retail counters, preferring defensives like FMCG and IT.

This adjustment phase could persist for a few months as companies recalibrate growth strategies and manage costs more efficiently.

Management Outlook and Future Plans

In the company’s post-earnings conference call, Trent’s management reiterated its commitment to long-term growth through aggressive store expansion and digital integration.

The company plans to add over 200 new stores by the end of FY2026, with a particular focus on expanding Zudio’s footprint across smaller towns. Management also aims to enhance supply chain efficiencies and improve digital sales channels.

While the strategy may suppress near-term margins, it is expected to drive long-term revenue growth. CEO P.V. Venkatraman emphasized that Trent remains “deeply focused on scaling responsibly while delivering customer value through quality products and accessible price points.”

For investors with a long-term horizon, the ongoing expansion could present an attractive entry opportunity once short-term volatility settles.

AI Stocks and Retail Tech Integration

Interestingly, Trent is also exploring integrating AI-driven inventory management systems to optimize stock levels and predict fashion trends. This approach mirrors what’s being seen across other AI stocks and technology-enabled retail firms globally.

By leveraging artificial intelligence for demand forecasting, product recommendation, and logistics, Trent aims to boost operational efficiency and reduce wastage, a move that could enhance margins in the long term.

Such technology adoption aligns with global retail trends, where companies are using data analytics to create a more personalized shopping experience and to build more efficient supply chains.

Investor Takeaway

The recent 7% drop in the Trent share price has certainly caught investor attention. However, for long-term shareholders, the decline appears more like a healthy correction after an extended rally rather than a fundamental weakness.

Trent’s robust business model, strong management backing from the Tata Group, and continued store expansion reinforce its leadership in India’s organized retail sector. Yet, near-term challenges such as cost inflation, competitive pressure, and slower consumer demand are expected to keep earnings growth muted.

Investors should monitor how the company manages its cost structure and whether margins can stabilize in the coming quarters.

For those looking to add exposure, analysts recommend staggered buying during dips rather than a lump-sum investment, given the high valuations.

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