Trent shares have declined sharply over two consecutive sessions, falling 10.00% after the company's disappointing third-quarter business update. The stock traded below ₹4,000.00 on Wednesday, approaching its 52-week low amid concerns over slowing growth momentum and premium valuations.

Stock Performance and Market Reaction

Shares fell for the second consecutive day, with the stock declining over 9.00% on Tuesday following the quarterly business update. The company reported revenue growth of 17.00% in Q3, significantly below management's earlier guidance of 25.00% shared in analyst meetings.

Analyst Ratings and Valuation Concerns

Morgan Stanley maintained its "overweight" rating with a price target of ₹5,456.00, stating that Q3 growth was largely in-line with their expectations, although lower than anticipated for Q3 and Q4 of FY25 and Q1 of FY26. However, Citi reiterated its "sell" rating with a price target of ₹4,350.00.

At current levels, Trent trades at a FY27 estimated price-to-earnings multiple of 72.00 times, lower than the five-year average of 95.00 times and nearly half the 140.00 times at its peak valuation.

Bernstein's Analysis: Growth Cycle Bottoming Out

Jignanshu Gor, Director at Bernstein India, believes the company's 17.00% year-on-year revenue growth in Q3 may have marked the bottom of Trent's growth cycle. Speaking to ET Now, Gor described the Q3 performance as a mixed bag, noting that while growth was lower than street expectations, it had not deteriorated further compared to Q2.

ICICI Direct: Time Correction Expected

Kaustubh Pawaskar, Lead Analyst at ICICI Direct, explained that expectations going into the December quarter were elevated due to seasonal factors. "So, basically in quarter three there was anticipation that there would be better growth, about 20.00%, largely driven by higher festive sales," he said.

According to Pawaskar, optimism was also fuelled by portfolio-level changes and the expected benefit of the GST rate cut. However, reported growth of 17.00% proved to be below both analyst and Street estimates of around 22.00%.

Competition and Store Expansion Challenges

Pawaskar pointed to intensifying competition in the value fashion segment alongside a high base from last year. "They have done changes in their portfolio, that is for sure. If you go to Westside or Zudio, a lot of portfolio change has been done," he said. "But competition is building up, especially in the value fashion space."

Analyst Consensus and Future Outlook

Despite the recent decline, 18 out of 28 analysts tracking Trent maintain a "buy" rating, while five each have "hold" and "sell" ratings. The stock is currently trading below Citi's lowest price target of ₹4,350.00.

Bernstein continues to maintain an outperform rating with a target price of ₹5,000.00 for March 2027, factoring in around 20.00% revenue growth over the next three years. Pawaskar expects it will take another two to three quarters for the base to normalize before assessing sustainable earnings growth.

Indian equity markets witnessed sharp selling pressure on Tuesday, with benchmark indices declining significantly due to profit-booking activities and cautious investor sentiment. Trent emerged as the top loser in Nifty 50 with shares tumbling over 8%, despite the company reporting strong 17% revenue growth in Q3.

Market Performance Overview

Benchmark indices faced broad-based selling with multiple factors contributing to the decline:

Profit-taking by traders in heavyweight stocks including Reliance Industries, HDFC Bank, and Trent weighed on key indices. Market participants remained cautious ahead of macroeconomic developments and lingering global uncertainties, while concerns around trade tensions and geopolitical events dampened risk appetite.

Sectoral Performance and Top Movers

Sectoral indices displayed mixed trends with certain sectors facing significant pressure:

Declining Sectors:

• Oil & gas index: Nearly 2% decline
• Media, chemicals, and FMCG sectors also dipped
• Defence stocks witnessed significant profit-booking

Gaining Sectors:

• Healthcare, pharma, PSU Bank, and metal indices led gainers

Nifty 50 Movers

Broader Market Activity

Market breadth leaned negative across exchanges with comprehensive trading activity:

Mid-cap and Small-cap Performance

Both mid-cap and small-cap segments traded in negative territory, though select stocks showed resilience:

Mid-cap Gainers (1-6%):

• National Aluminium, Union Bank of India, Fortis, IndusInd Bank, MFSL, Voltas

Mid-cap Losers (3-4%):

• Swiggy, Vishal Mega Mart, Premier Energies, Federal Bank, Waaree Energies, Godfrey Phillips

Small-cap Gainers (2-4%):

• Redington, IIFL, MCX, Kajaria Ceramics, Hindustan Copper, Natco Pharma

Small-cap Losers (3%):

• Ola Electric, Inox Wind, First Cry, IGIL

On BSE, Aether, South Indian Bank, National Aluminium, Strides Pharma, and Tamilnad Mercantile Bank surged 4-7%, while Trent and VMart shares were among the major drags on the exchange.