Trent shares in high demand after a mixed set of earnings; what's driving the stock

Trent shares surged on Thursday after the Tata group firm reported a mixed set of results. Jefferies maintained a 'hold' rating on Trent with a target of Rs 1,400 after the earnings announcement, implying upside potential of mroe than 13 per cent.

Trent shares surged on Thursday, a day after the Tata group company — which operates the Westside retail stores — reported a mixed set of results for the quarter ended December 2022. The Trent stock jumped by as much as Rs 94.2 or 7.6 per cent to Rs 1,329.9 apiece on BSE with large volumes.

At noon, the Trent stock held on firmly to the green with a gain of seven per cent at Rs 1,322.5 apiece. As many as 98,000 Trent shares changed hands for the day so far, as against a daily average of 37,000 in the past two weeks, according to exchange data.

So what's driving Trent shares higher?

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Jefferies maintained a 'hold' rating on Trent with a target of Rs 1,400 after the earnings announcement. The brokerage said the company saw good momentum in its flagship format, with growth of 17 per cent in Westside on a like-for-like (LFL) basis. Its target implies upside potential of more than 13 per cent from Trent's closing price on Wednesday.

Trent's overall growth came in better than the brokerage's estimates but its gross and EBITDA margins fell short of its expectations. Jefferies said Trent's valuation remains a concern.

Trent Q3 results

After market hours on Wednesday, the Tata group company reported a year-on-year jump of 36 per cent in net profit to Rs 155 crore for the quarter ended December 2022 compared with the corresponding period a year ago. The company's revenue increased 53.6 per cent to Rs 2,303 crore for the three-month period, according to a regulatory filing.

However, the company's margin — a key measure of profitability for a business — contracted by 410 basis points on a year-on-year basis to 14 per cent.

According to Zee Business research, Trent's quarterly profit was estimated at Rs 138 crore, revenue at Rs 2,108 crore and margin at 18 per cent.

Trent share price history

Trent shares have rewarded investors with a return of almost 24 per cent in the past one year, a period in which the Nifty50 has risen about two per cent.

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