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Investors in Trent Ltd stock are staring at two key hurdles after its March quarter (Q4FY26) earnings. First, whether the strong revenue and margin growth seen last quarter can be sustained consistently. Second, the stock’s rich valuations leave limited room for a sharp near-term upside.
A recent pressing concern for the retailer has been moderating revenue growth amid soft demand and intensifying competition in the sector. Year-on-year standalone revenue growth declined for six straight quarters from Q2FY25 to Q3FY26. The trend reversed in Q4FY26, with revenue rising 20.2% to ₹4,937 crore. While this marks the strongest growth in the past four quarters, it remains well below the over 30% growth rates the company had routinely delivered earlier.
Standalone revenue growth in FY26 slowed to 18.2% year-on-year to ₹19,701 crore, down from about 40% and 55% in FY25 and FY24, respectively. Analysts at Motilal Oswal Financial Services said Trent’s FY26 growth decelerated due to cannibalization of sales in existing stores, weak consumer sentiment, and expansion into newer cities that start at lower initial productivity. The brokerage’s channel checks suggest that sales declines in cannibalized stores have now eased.
Growth in the March quarter was driven by store additions and better like-for-like growth in its fashion portfolio at low single-digit growth versus a marginal decline in Q3. On a net basis, the company added 22 Westside and 109 Zudio stores in Q4, taking the total to 300 and 963, respectively, as of 31 March. Net store additions for FY26 stood at 52 for Westside and 198 for Zudio.
Emerging categories, including beauty and personal care, innerwear, and footwear, now contribute over 21% to Trent’s revenues.
True, the base is relatively favourable for the coming quarters, which could support growth. However, management commentary remains cautious. According to Trent, consumer sentiment was relatively stable at the start of Q4FY26, but the impact of unfolding geopolitical developments is still playing out. Management pointed out that consumers are spending cautiously, leading to moderation in discretionary demand amid persistent macro uncertainties and a potential rise in the cost of living. The second-order effects of the conflict in West Asia on supply chains, commodity prices and inflation could further have an adverse impact on near-term demand.
Management also flagged early signs of inflation in select raw material costs, along with some disruption to labour availability for Trent's suppliers in certain geographies.
For now, Trent’s Q4FY26 gross margin expanded 171 basis points year-on-year to at 44.3%, marking the sharpest improvement seen in recent quarters and ahead of analysts’ estimates. The key monitorable is whether margins can hold.
“While margins had and may continue to surprise positively, we believe, margin expansion is not sustainable and acceleration in growth with margins sustaining will be key for valuation multiples to sustain/re-rate,” said a Citi Research report on 22 April.
Amid falling growth rates, Trent’s shares are down about 20% over the past one year. Even so, the stock trades at about 60x FY28 earnings, based on the average earnings per share (EPS) estimates of six brokerages.
Any meaningful upside will depend on Trent continuously surprising positively on growth as well as margins. This may not be that easy. As the Citi report noted, “We continue to like Trent’s business model and execution track record but await better valuation and/or successful scale-up of new pilot formats to add new growth engines.”
Pallavi Pengonda is a Senior Editor at Mint, where she leads the Mark to Market team. With over a decade of experience at the publication, she is the authority on breaking down complex financial reports and tracing how big economic shifts actually ripple through the business world. From deep-dives into the oil and gas sector to the latest trends in retail and tech, she covers giants like Reliance Industries and Hindustan Unilever with a sharp, analytical eye. Her path to journalism was a bit of a pivot. After earning her Master’s degree in Finance from Mumbai’s Welingkar Institute, an internship at the DNA newspaper changed everything. An editor there gave her some classic advice: "You’ll learn a ton, even if the pay doesn’t match." She took the leap, spent three years at DNA, and never looked back. When she isn’t decoding the stock market to help readers make smarter investment moves, Pallavi keeps things low-key. You’ll likely find her recharging over the weekend with a good book, heading out for a long walk, or spending time at her easel painting.