Banks, autos shine as Trent slumps: Where Narendra Solanki sees value now
Narendra Solanki from Anand Rathi Shares & Stock Brokers raises concerns over Trent's stretched valuations after three consecutive quarters of below-expectation growth, with revenue growth slipping below 20% against management guidance of 25%. He favors banking sector prospects, particularly Axis Bank and ICICI Bank among private lenders while preferring PSU banks overall. The auto sector shows strong momentum with two-wheelers leading his preferences, followed by auto ancillaries and commercial vehicles.
*this image is generated using AI for illustrative purposes only.
Market expert Narendra Solanki from Anand Rathi Shares & Stock Brokers has raised concerns over Trent's stretched valuations following the company's latest quarterly performance. The retail stock has reported three consecutive quarters of growth below expectations, prompting questions about its premium multiples at current levels.
Trent's Growth Challenges
Speaking to ET Now, Solanki highlighted the sharp slowdown in Trent's revenue growth, which has made it difficult to justify the company's premium valuations. The stock's growth has slipped below 20% despite management guidance of around 25% for the fiscal year.
| Performance Metric | Previous Range | Current Performance | Management Guidance |
|---|---|---|---|
| Revenue Growth | 30-35% | Below 20% | Around 25% |
| Quarterly Performance | - | Three consecutive quarters below expectations | - |
"The company was earlier operating on a 30–35% growth pedestal. With three quarters already well below guidance, achieving that number now looks extremely difficult," Solanki said, adding that valuations remain challenging unless the company delivers a sharp and sustained recovery in growth.
Banking Sector Shows Promise
On the banking front, Solanki noted that earnings from large private banks were largely encouraging, supported by improving deposit and disbursal growth. Among private lenders, he continues to favor Axis Bank and ICICI Bank, while maintaining an overall preference for PSU banks within the sector.
| Banking Preference | Category | Rationale |
|---|---|---|
| Top Choice | PSU Banks | Overall sector preference |
| Private Banks | Axis Bank, ICICI Bank | Encouraging earnings performance |
| Sector Outlook | Positive | Improving deposit and disbursal growth |
Commenting on market reactions to IndusInd Bank results, Solanki observed that stock price movements often diverge from fundamentals in the short term, but sector-wide trends remain supportive.
Auto Sector Momentum Builds
Solanki highlighted strong momentum across the auto sector, with growth visible in two-wheelers, passenger vehicles, and commercial vehicles. His sector preferences are clearly ranked, with two-wheelers leading the pack.
Auto Sector Preferences:
- First: Two-wheelers
- Second: Auto ancillaries
- Third: Commercial vehicles
Regarding commercial vehicles, Solanki noted that the CV cycle is still in its early stages. "The next two to three quarters could be very strong for commercial vehicles," he said.
Sector Outlook and Investment Themes
Looking ahead, Solanki outlined his preferred investment themes for the next 12 months, spanning multiple sectors with strong growth potential.
| Sector | Rationale | Specific Focus |
|---|---|---|
| Autos & Auto Ancillaries | Strong momentum across segments | Two-wheelers leading |
| Metals | Strong commodity cycle | - |
| Defence Manufacturing | Sector growth potential | - |
| Healthcare | Constructive outlook | Hospitals particularly favored |
| Banking | Sector preference | PSU lenders top choice |
| NBFCs | Select opportunities | Stock-specific picks |
In the pharmaceutical space, Solanki remains constructive on healthcare, particularly hospitals, while expecting a gradual turnaround in pharma manufacturing. He pointed to upcoming GLP-1 patent expiries in large markets such as India and Brazil as a potential catalyst for the sector in early 2026, along with opportunities in complex generics.
Market Volatility Concerns
Regarding the sharp rally in Indian Energy Exchange, Solanki cautioned that regulatory uncertainty remains a key overhang. With APTEL questioning the process behind market coupling rules, he expects volatility in the stock to remain elevated until legal clarity emerges.
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