On July 4, 2025, shares of Tata Group’s retail giant Trent Ltd. plummeted by as much as 10%, marking the steepest single-day decline in three months, following a cautious revenue growth warning at the company’s 73rd Annual General Meeting (AGM). The Q1 FY26 business update, reporting a 20% year-on-year revenue growth to ₹5,061 crore, fell significantly short of the company’s historical 35% CAGR from FY20–25, prompting Nuvama Institutional Equities to downgrade the stock to “Hold” and slash its target price to ₹5,884 from ₹6,627. This comprehensive analysis explores the reasons behind the Trent share price crash, the Q1 FY26 performance, brokerage reactions, store expansion plans, and the company’s long-term growth vision, providing investors with a detailed perspective on Trent Ltd.’s trajectory.
Q1 FY26 Performance: A Slower Growth Trajectory
During the AGM held on July 3, 2025, Trent Ltd. projected a 20% revenue growth for Q1 FY26 (April–June 2025), a stark contrast to the 35% compounded annual growth rate (CAGR) achieved between FY20 and FY25. The company’s quarterly business update, released on July 4, 2025, confirmed this outlook, reporting standalone revenue of ₹5,061 crore, up from ₹4,228 crore in Q1 FY25. This growth, while positive, disappointed investors accustomed to Trent’s robust historical performance, leading to a sharp sell-off that saw the stock drop to an intraday low of ₹5,652 on the National Stock Exchange (NSE), erasing nearly ₹17,000 crore in market capitalization.
The retail portfolio as of June 30, 2025, included 248 Westside stores, 766 Zudio stores (including two in the UAE), and 29 outlets across other lifestyle concepts like Samoh and Misbu. During Q1 FY26, Trent added one Westside store and 11 Zudio outlets, reflecting its aggressive store expansion strategy. Despite this, the 20% growth fell short of the 25% CAGR previously deemed sustainable by management during an analyst meet, raising concerns about near-term momentum in the core fashion business.
Nuvama Downgrade: Revised Estimates and Valuation Concerns
Nuvama Institutional Equities, a prominent brokerage, responded to Trent’s AGM commentary by downgrading the stock from “Buy” to “Hold”, citing a slower-than-expected growth trajectory. The brokerage slashed its FY26 and FY27 revenue estimates by 5% and 6%, respectively, and reduced EBITDA projections by 9% and 12% over the same period. The target price was revised to ₹5,884, reflecting concerns over valuation pressures given the stock’s 70% surge in 2025 prior to the crash. Nuvama noted, “The current run rate falls short of management’s aspiration of 25% growth for the coming few years, prompting us to re-evaluate growth targets”.
Despite the downgrade, Nuvama acknowledged Trent’s strong execution track record and long-term ambitions, particularly the goal to achieve a tenfold revenue increase from FY23 levels. The brokerage highlighted potential growth drivers like Zudio Beauty and Star Bazaar, but cautioned that these ventures need stabilization before scaling significantly. The AGM’s conservative tone, combined with high valuation multiples, justified the cautious stance, as Trent’s stock was trading at 40.5 times its book value as of April 2025.
Brokerage Perspectives: Mixed Sentiments
While Nuvama adopted a cautious outlook, other brokerages offered varied perspectives. Morgan Stanley maintained its “Overweight” rating with a target price of ₹6,359, projecting a 25–30% CAGR over the next five years, driven by Trent’s ambitious store expansion and market leadership in India’s retail sector. The brokerage emphasized the competitive landscape, noting that management sees “space for multiple players” despite rising competition. Conversely, Macquarie reiterated an “Underperform” rating, citing concerns over same-store sales growth and seasonal demand softness, while Motilal Oswal Financial Services retained a “Buy” rating with a target price of ₹6,800, citing Trent’s superior inventory management and return on capital employed (RoCE) of 30%.
Of the 25 analysts covering Trent, 18 recommend “Buy,” four suggest “Hold,” and three advise “Sell,” reflecting a broadly positive but cautious sentiment. The share price volatility, with a 9% drop to ₹5,652 on July 4, 2025, underscores investor sensitivity to growth projections, particularly given Trent’s 1,000% rally over the past five years.
Store Expansion and Strategic Vision
Trent’s AGM reaffirmed its commitment to aggressive store expansion, targeting the addition of 250 stores annually across all formats, including Westside, Zudio, and Star Bazaar. As of June 30, 2025, the company operates over 1,000 retail locations, a milestone achieved through consistent growth in its fashion and grocery segments. Management highlighted that revenue has doubled since the tenfold growth vision was announced in FY23, signaling progress toward long-term goals. The Star Bazaar grocery business, with 78 stores as of March 2025, reported a 17% revenue growth in Q4 FY25, driven by its focus on own-brand staples and fresh offerings.
Zudio, a key growth engine, continues to dominate the value fashion segment, with 766 stores contributing significantly to Trent’s revenue. The introduction of Zudio Beauty and plans to scale Star Bazaar into a major player in India’s food retail market were highlighted as future catalysts. However, Nuvama cautioned that these initiatives require stabilization to deliver meaningful scale, citing challenges like cannibalization from new stores and competition in micro-markets.
Challenges: Demand Softness and Valuation Pressures
The Q1 FY26 growth slowdown reflects broader challenges in India’s retail sector. Trent’s AGM acknowledged headwinds such as inflation, weak discretionary spending, and over-competition, which have impacted same-store sales growth. Nuvama noted that like-for-like (LFL) sales in the Star Bazaar portfolio are a concern, requiring resolution to achieve meaningful scale. Additionally, the seasonal decline in Q1 and cannibalization from new stores in existing markets contributed to the moderated outlook.
The share price crash also reflects valuation concerns, with Trent trading at a premium valuation compared to peers. The 9% drop to ₹5,652 on July 4, 2025, reduced its market capitalization to approximately ₹2.04 lakh crore, down from ₹2.21 lakh crore earlier in the year. Investors are wary of the stock’s ability to justify such valuations amid a 20% growth rate, significantly below the 35% CAGR of recent years.
Long-Term Growth Potential: A 10x Vision
Despite near-term challenges, Trent’s long-term vision remains ambitious. The tenfold revenue target from FY23, reiterated at the AGM, is supported by a conservative execution track record. Chairman Noel Tata emphasized the potential of the Star Bazaar grocery business, projecting it could surpass Westside and Zudio in scale due to India’s vast food retail market. The company also clarified no plans to merge Star Bazaar with Big Basket, focusing instead on own-brand offerings to differentiate in the competitive grocery segment.
Trent’s inclusion in the BSE Sensex in June 2025, alongside Bharat Electronics, triggered $330 million in passive fund inflows, boosting investor confidence. The company’s supply chain strengths, design capabilities, and frequent style drops continue to set it apart from competitors like Fast Retailing, positioning it as a leader among Asian fashion retailers.
Investor Guidance: Navigating the Downturn
For investors, the Trent share price crash presents both risks and opportunities. The 20% Q1 FY26 growth aligns with the company’s update but falls short of expectations, prompting a reassessment of growth targets. Those considering investment should monitor same-store sales recovery, Zudio Beauty’s stabilization, and Star Bazaar’s scalability. Morgan Stanley’s 25–30% CAGR projection offers optimism, but Nuvama’s downgrade underscores the need for caution at current valuation levels. Consulting a certified financial advisor is recommended before making investment decisions, as stock market risks remain high.
Balancing Near-Term Challenges with Long-Term Promise
The Trent share price crash on July 4, 2025, following the AGM’s revenue growth warning, reflects investor disappointment with the 20% Q1 FY26 growth, a sharp decline from the 35% CAGR of FY20–25. Nuvama’s downgrade to “Hold” and target price cut to ₹5,884 highlight valuation concerns, but Trent’s store expansion, Zudio’s dominance, and Star Bazaar’s potential signal robust long-term growth. With a tenfold revenue vision and a strong execution track record, Trent Ltd. remains a compelling player in India’s retail sector, despite near-term headwinds. Investors should stay informed via NSE/BSE updates and official Trent announcements to navigate this dynamic landscape.
