Trent, part of the Tata group of companies and the flagship Nifty 50 index, has seen a massive meltdown in the year 2025, with its stock emerging as the worst-performing constituent.
Shedding 40% in the last one year, Trent — the company behind fashion retail outlets like Westside and Zudio — has sharply underperformed the Nifty 50 index, which rose 10.5% in 2025. This is the first annual fall recorded by the company after a gap of 11 years.
Thus, this Tata group stock remains a multibagger for its long-term investors, offering 552% returns in the last five years and posing a pertinent question: Should you consider dumping the stock or staying put?
But before that, one must understand the reason for the slowdown in this high-flying stock.
Concerns around Trent shares
Trent’s sharp underperformance in 2025 was largely driven by a valuation reset, as its premium, near triple-digit P/E, became difficult to sustain amid moderating growth, opined analysts.
Vinit Bolinjkar, Head of Research, Ventura, said that growth pains emerged post-FY25: Revenue per sq ft resilient at ₹15,000+ but topline cooled amid densification and economic slowdown. “Margins squeezed by competition (Reliance Retail, Aditya Birla) and input costs, while capex for 100+ stores yearly strains cash flows despite OCF rise to ₹1,120 crore,” the Ventura analyst added.
Elevated valuations at 95x P/E persist despite correction from 101x, with FII outflows and technical weakness (RSI oversold) adding pressure, said Bolinjkar.
Vaqarjaved Khan, CFA, Sr. Fundamental Analyst, Angel One, explained that operationally, Trent’s growth did not collapse, but its quality deteriorated — topline momentum was supported by aggressive store additions, while like-for-like sales slipped to low single digits, indicating demand softness and early signs of cannibalisation.
In Q2FY26, it added 19 Westside (the highest-ever in a quarter) and 44 Zudio stores (including one in the UAE) while consolidating six Westside and four Zudio stores. Management emphasised on opening more stores in upcoming areas, which might have a longer gestation period vis-à-vis the existing store network.
“The rapid expansion of Zudio sustained revenues but created mix-led margin pressure and higher operating leverage, with depreciation and cost absorption weighing on profitability, compounded by muted consumer sentiment and cost-of-living pressures,” Khan added.
Bolinjkar sees a potential rebound in the first half of 2026 as expansion matures with new formats like Star Baazar and Zudio Ramp, and recovery in margins via scale or opex leverage to 8-9% and 20-25% sales CAGR resumes. He said that long-term returns support buy-on-dips at current levels.
“Looking ahead, the Star grocery format offers optional upside through improving sales density, while the Zara JV stake reduction enhances capital flexibility. However, a meaningful rerating in 2026 will hinge on a recovery in SSSG, margin stabilisation despite Zudio’s scale-up, and evidence that growth becomes productivity-led rather than purely store-addition driven,” Khan opined.
According to Trendlyne data, nine analysts have a ‘Strong Buy’, three ‘Buy’, and six a ‘Hold’ rating on Trent stock. Meanwhile, four have ‘Sell’ and two ‘Strong Sell’ calls.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
