Trent Ltd, a Tata Group company, saw a significant share price decline of 8.7% to Rs 5,652 on the National Stock Exchange on Friday. This drop followed the company's AGM announcement regarding slower revenue growth, leading Nuvama brokerage to revise its rating to 'hold' and reduce the target price from Rs 6,627 to Rs 5,884.During its AGM, Trent revealed anticipated revenue growth of approximately 20% for Q1FY26, indicating a substantial reduction from its previous performance, according to an ET report. This forecast represents a considerable decrease from the 35% CAGR achieved during FY20-FY25, falling below the company's targeted 25% CAGR for future periods.Nuvama expressed its concerns about the potential slowdown, stating: "At its AGM, Trent disappointed on near-term growth expectations in its core fashion business, which is expected to deliver ~20% growth in Q1FY26E, sharply down from its five-year CAGR of 35% (FY20–25).

Management reaffirmed their aspiration of 25%-plus growth for the coming few years, but the current run rate falls short of it."Following this development, Nuvama adjusted its projections downward, reducing FY26 and FY27 revenue forecasts by 5% and 6% respectively. Additionally, EBITDA estimates saw reductions of 9% and 12%.The brokerage's decision to adopt a more conservative investment position stemmed from the observed growth moderation, necessitating a reassessment of both Trent's earnings outlook and valuation.

While downgrading its rating, Nuvama recognised Trent's enduring aspirations and implementation success, specifically highlighting its reaffirmed goal of achieving a tenfold revenue increase in the upcoming years—a strategic objective initially presented in FY23. During the AGM, the leadership team reported that revenue had already doubled since announcing this target."This growth will be backed by robust additions of ~250 stores across formats as per management guidance, whose tone has historically been conservative.

Accordingly, we remain confident of management beating this given the execution track record," Nuvama said.The financial services firm identified Zudio Beauty and Star Bazaar as key revenue generators for future expansion, whilst noting that both ventures require operational stability before undertaking significant growth initiatives.

Star Bazaar outlook: Trent Hypermarket (Star Bazaar) has the potential to grow larger than Westside and Zudio, primarily due to the substantial size of India's food retail sector.Independent operations: Star Bazaar will maintain its focus on Trent's branded products, without plans to integrate with Big Basket, which is viewed as a higher-priced alternative.Growth targets: Management confirmed their FY23 target of achieving 10x revenue growth, highlighting that revenue has already increased twofold since the announcement.Retail expansion plans: The organisation plans to establish over 250 new stores across various formats in FY26, with flexibility to increase this number based on market dynamics and real estate availability.Trent's share price has increased by approximately 70% in 2025, reflecting positive investor sentiment towards its growth strategy. However, Nuvama has expressed concerns about the sustainability of these high valuations, noting indications of declining momentum, according to the ET report."Underwhelming near-term growth prompts the downgrade to 'HOLD' as the current valuation is too demanding. A significant jump in growth profile, or pickup in other levers i.e.

Star Bazaar, Zudio Beauty remain the key risks to our view," the brokerage concluded.The company disclosed its Q1 business performance update on Friday morning, post market opening.For the April–June quarter of FY26, Trent's standalone revenue from product sales (including GST) reached Rs 5,061 crore, showing a 20% increase from Rs 4,228 crore in the corresponding period of the previous year, aligning with their projected guidance.As at June 30, 2025, Trent's retail presence comprised 248 Westside stores, 766 Zudio stores (with two locations in the UAE), and 29 stores representing various other lifestyle concepts.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)