How Has Trent Captured The Apparel Market With Zudio?
An analysis of Zudio’s contribution to Trent Ltd’s robust Q4 results of a 51% revenue jump, 16x net profit surge and its shares at an all-time high.
Trent Ltd is involved in retailing a diverse range of products including apparel, footwear, accessories, toys, games, food, grocery, and non-food items through its various retail outlets such as Westside, Zudio, Zara, Tata Star Bazaar, and others.
Zudio’s model
Tata’s Trent Ltd has outperformed its competitors in the Indian apparel market, the swift expansion of its Zudio stores, catering to budget-conscious youth, has been a significant driver, their strategy to offer a wide range of affordable products, particularly priced below Rs 999, seems to have resonated with young customers. Trent’s success is attributed to its focus on expanding Zudio outlets nationwide with 549 outlets already in place.
Financials
Trent Limited, through consistent store growth and product diversification, has strengthened its market presence witnessing a significant increase in its quarterly results. In Q4FY24, Trent experienced a 51% y-o-y increase in revenue from operations, reaching Rs.3,297.70 crore compared to Rs.2,182.75 crore in Q4 FY 2022-23. Additionally, it achieved a consolidated net profit of Rs.712.09 crores, marking an increase of almost 16 times, an impressive 1,484% surge, compared to a profit of Rs.44.95 crore in the Q4 FY 2022-23, EBITDA increased to Rs.477 Crores from Rs.211 Crores, with an EBITDA margin of 15% from 10.2% on YoY Basis. The company’s Board has also proposed a dividend of 320%, or Rs.3.20 per equity share, subject to shareholder approval.
| Metrics | Q4FY24 | Q4FY23 |
|---|---|---|
| Revenue from Operations (in crore) | Rs. 3,297.70 | Rs. 2,182.75 |
| Net Profit (in crore) | Rs. 712.09 | Rs. 44.95 |
| EBITDA (in crore) | Rs. 477 | Rs. 211 |
| EBITDA Margin | 15% | 10.2% |
Impact on share price
Trent’s shares surged over 7% to reach a new all-time high of Rs.4,669.95, which came after the company announced its Q4 results. Trent’s shares opened at Rs.4,450.25, up from the previous close of Rs.4,351.45, and climbed by as much as 7.32% to hit a fresh record high.
Competitors
Although Reliance Industries and Aditya Birla have entered the budget apparel market as possible competitors, analysts predict minimal effect on Zudio’s growth. While Shoppers Stop, Aditya Birla Fashion and Retail, and V-Mart Retail exhibit varying store numbers, Zudio’s aggressive expansion has surged its overall count to 549, significantly covering the targeted consumers.
Conclusion
In conclusion, Zudio’s rapid expansion and offerings majorly drove Trent Limited’s outstanding financial performance this quarter. Revenue, net profit, and EBITDA surged due to the successful approach of expanding in the apparel market and otherwise as well. Analysts predict minimal competition impact, with Zudio’s continued contribution, Trent is poised to sustain growth and enhance market presence.
Disclaimer: This post has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.