Trent reported better than expected result. Overall recovery of Westside on comparable basis at 96% is quite impressive. Revenue from e-commerce channel grew 150% YoY continuing to support loss of sale from brick-and-mortar stores. However, recovery has been impacted due to imposition of lockdown / trade restriction by states of India from mid-march.

Gross margin expanded by 671bp YoY to 56.4% due to better revenue mix. Rental benefit (part of rent negotiations which won’t be accrued in future) of Rs 120 million has been added to Other Income. EBITDA grew by 47%YoY driven by operating leverage benefits.

Launch of loyalty program during Dec’20 is tracking well as more members are continuing to on-board. Store addition of Westside and Zudio remains healthy.

Commenting on the result review, IDBI Capital said, "We expect current lockdown to impact recovery of overall business. Consequently, we have trimmed our EPS estimated by 4-5% during FY22-23E. Despite TRENT being our top pick in apparel retailing sector, expensive valuation continues to act as deterrent. Our revised TP stands at Rs 559 with SELL rating due to rally in the stock price."

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