Is Trent worth buying? Tata stock falls 40% in 2025
What's the story
Trent, the Tata Group company that owns popular fashion retail brands like Westside and Zudio, has witnessed a massive 40% decline in its share price over the past year. This makes it the worst performer on the Nifty 50 index for 2025. The fall comes after an impressive five-year run where Trent's shares delivered a whopping 552% return to long-term investors.
Market analysis
Trent's underperformance: A valuation reset
Analysts attribute Trent's poor performance in 2025 to a valuation reset. The company's premium, nearly triple-digit price-to-earnings (P/E) ratio has become hard to maintain amid slowing growth. "Growth pains emerged post-FY25: Revenue per sqft resilient at ₹15,000+ but topline cooled amid densification and economic slowdown," said Vinit Bolinjkar, Head of Research at Ventura. He added that margins have been squeezed by competition and input costs, while capital expenditure for new stores strains cash flows despite increase in operating cash flow.
Business hurdles
Trent's growth and operational challenges
Vaqarjaved Khan, CFA and Senior Fundamental Analyst at Angel One, said that while Trent's growth hasn't collapsed, its quality has deteriorated. The company's topline momentum was driven by aggressive store additions but like-for-like sales have dipped to low single digits. This indicates demand softness and early signs of cannibalization. In Q2 FY26 alone, Trent added 19 Westside and 44 Zudio stores while consolidating six Westside and four Zudio shops.
Market outlook
Future prospects for Trent
Bolinjkar expects a rebound in H1 2026 as expansion matures with new formats like Star Bazaar and Zudio Ramp. He also anticipates margin recovery via scale/operating expenditure leverage to 8-9% and a sales compound annual growth rate (CAGR) of 20-25%. Khan said, "Looking ahead, the Star grocery format offers optional upside through improving sales density." However, he cautioned that a significant rerating in 2026 will depend on margin stabilization despite Zudio's scale-up, and evidence that growth becomes productivity-led.