This Tata Group stock extends winning streak to 11th consecutive year, surges 126% in CY24 | Stock Market News

Trent, a Tata Group company renowned for its diverse retail portfolio, has seen exceptional growth in its share price this year and is poised to deliver multibagger return. The strong demand for the Nifty 50 stock continues to drive its impressive performance on Dalal Street.

Although the stock has witnessed some profit booking at higher levels in recent months, it is still up by 126% year-to-date. During this period, the stock price has increased from ₹3,061 to its latest closing price of ₹6,929.

This significant growth in stock price has not only boosted shareholders’ wealth but also increased the company’s market capitalisation, to nearly ₹3 lakh crore in October, when the stock touched a fresh record high of ₹8,345.

Notably, Trent surpassed the ₹1 lakh crore market capitalization milestone in December of last year. In the subsequent seven months, the company’s market cap doubled, crossing the ₹2 lakh crore mark. In the following three months, it added nearly ₹1 lakh crore to its valuation.

Stock up for 11th straight year

There are a few stocks that can withstand stock market crashes, industry downturns, and weak consumer demand year after year, and Trent is one of them. This is clearly demonstrated by its impressive rally over an extended period.

The stock has finished each of the last 10 years in positive territory, consistently breaking record milestones with each passing year.

Despite this impressive performance, analysts maintain a positive outlook on the stock’s valuations. They believe that the company’s robust growth justifies its premium valuation in the market.

Trent operates a portfolio of retail concepts. The primary customer propositions of Trent include Westside, one of India’s leading chains of fashion retail stores, Zudio, a one-stop destination for great fashion at great value and Trent Hypermarket, which operates in the competitive food, grocery, and daily needs segment under the Star banner.

On an expansion spree

Trent is expanding aggressively in Tier II and III cities to drive growth while Zudio, with its first-mover advantage and high brand equity, retains strong customer loyalty. Its key strengths include strategic store locations and attractive price points. 

According to the domestic brokerage firm Elara Capital, non-metro cities are expected to account for 60% of Zudio’s new store expansion in the coming years, driven by increasing rural consumption. Retailers are targeting non-metro markets due to lower rental costs and sufficient demand, making operations economically favourable.

However, maintaining a strong online presence with Zudio’s low price points may not be operationally viable. Despite competition from brands such as V-Mart, Shoppers Stop and Pantaloons, Zudio stands out due to its unique positioning, as it doesn’t face direct “apple-to-apple” competition, as highlighted by Elara Capital.

The brokerage also highlighted that the impact of quick commerce (Q-Commerce) is more pronounced on Kirana stores, Amazon, and Flipkart, with the apparel category remaining largely unaffected as use cases are limited to products like socks, innerwear, and handkerchiefs.

In a strategic move, Trent has recently launched its new lab-grown diamond (LGD) brand, ‘Pome,’ in Westside stores. It plans to develop an LGD jewelry brand, introduce exclusive brand outlets (EBOs), and accelerate its growth.

Trent’s industry-leading growth, driven by healthy same-sales store growth, store productivity, and robust footprint additions, along with the scale-up of Zudio and newer categories (Beauty, Lab-grown diamonds), offer a huge runway for growth over the next few years, according to Motilal Oswal.

Furthermore, Zudio’s beauty and personal care segment has grown significantly in recent years, now accounting for 20% of total revenues, up from just 10%. Analysts believe this growth is expected to drive further expansion, particularly with the potential rise in demand for beauty products.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.