Trent Ltd. has been in the headlines for two contrasting reasons in 2025: a sharp FII exit and a record festive season. The company’s Q4 FY25 results, released on November 7, 2025, showed a 46.5% year-on-year drop in net profit to ₹349.92 crore, despite a 38.46% increase in revenue to ₹17,135 crore. This divergence between revenue and profit growth has raised concerns among institutional investors, particularly FIIs, who have been reducing their exposure to Trent. The FII stake in Trent has declined from 18.2% in March 2025 to 15.7% in September 2025, according to NSE data. At the same time, domestic retail investors and mutual funds have increased their holdings, with the retail stake rising from 12.5% to 14.8% in the same period.

The festive season, traditionally a strong period for retail stocks, saw Trent’s Westside, Zudio, and Utsa brands reporting robust sales. However, the company’s margins were under pressure due to higher input costs and aggressive expansion, which impacted profitability. The stock price, which touched a 52-week high of ₹7,493 in January 2025, has corrected to ₹4,760 as of November 2025, reflecting the market’s cautious outlook.

The FII exit is not unique to Trent; it is part of a broader trend of FIIs reducing exposure to Indian consumer stocks in 2025, driven by global macroeconomic uncertainties and a shift towards value stocks. However, Trent’s case is particularly interesting because of its strong brand, consistent growth, and leadership in the organized retail sector.

Trent Ltd.’s valuation is a key point of debate among investors. The company is trading at a P/E ratio of 108.44, which is much higher than the sector average of 60-70. The P/B ratio is 30.33, and the P/S ratio is 9.25, both of which are premium to the sector. The intrinsic value analysis suggests that Trent is trading at a 62% premium to its median intrinsic value, indicating that the stock may be overvalued in the short term.

However, Trent’s fundamentals remain strong. The company has delivered a 67.2% CAGR in profit growth over the last five years, and its ROE is consistently above 25%. The balance sheet is healthy, with a debt-to-equity ratio of 0.15, and the company has a strong cash flow from operations.

The table below compares Trent’s valuation metrics with its peers:

Trent’s premium valuation is justified by its strong growth, brand strength, and leadership in the organized retail sector. However, the recent profit drop and high valuation multiples suggest that the stock may be vulnerable to further corrections if earnings do not recover in the coming quarters.

The Indian retail sector is undergoing a significant transformation, driven by changing consumer sentiment, digital adoption, and the rise of organized retail. Trent Ltd. is at the forefront of this transformation, with its Westside, Zudio, and Utsa brands catering to different segments of the market. The festive season, which is traditionally a strong period for retail stocks, saw robust demand for Trent’s products, but the company’s margins were under pressure due to higher input costs and aggressive expansion.

Consumer sentiment in India has shifted in 2025, with a greater focus on value and affordability. This has benefited brands like Zudio, which offers affordable fashion, but has put pressure on premium brands like Westside. The GST 2.0 implementation in September 2025 has also impacted consumer spending, with some categories seeing a decline in demand.

The table below compares the performance of key retail stocks in 2025:

Trent’s revenue growth is the highest among its peers, but its net profit growth and stock price performance are the weakest, reflecting the challenges it faces in maintaining margins and profitability.

The outlook for Trent Ltd. in 2025-26 is mixed. On the positive side, the company’s strong brand, consistent growth, and leadership in organized retail provide a solid foundation for long-term success. The expansion of the Zudio and Utsa brands, along with the continued popularity of Westside, should drive revenue growth in the coming quarters. However, the company faces challenges in maintaining margins and profitability, particularly in a competitive and cost-sensitive environment.

Analysts have revised their price targets for Trent Ltd. in light of the recent results and valuation. The consensus price target is ₹5,800, with a range of ₹5,200-6,500. This implies a potential upside of 10-20% from the current price of ₹4,760, assuming a recovery in earnings and a stabilization of margins.

The table below summarizes the analyst price targets and recommendations:

Investors should monitor Trent’s quarterly results, margin trends, and FII ownership for any signs of improvement or deterioration. The company’s ability to navigate the challenges of margin pressure and maintain its growth momentum will be key to its long-term success.