Retail shake-up: Trent struggles, DMart steadies, Nykaa and Jubilant emerge stronger: Karan Taurani

Shares of Trent fell further after the update, falling more than 8%, as investors continued to price in slower growth and increasing competitive pressure in the budget fashion segment. According to Karan Taurani, EVP at Elara Securities, the sharp correction reflects a valuation downgrade rather than just an earnings revision.Speaking to ET Now, Taurani said Trent’s expected revenue growth has declined to 15-17% from the previous range of 20-25%, mainly due to weak like-for-like (LFL) growth of 2-3%. While store expansions, especially for Zudio, remain on track, sales at newer non-metro stores are lower, hurting overall performance.

He added that increasing competition is rapidly eroding Zdio’s market share, with several new entrants and existing players expanding aggressively. Adoption of the category in smaller cities is also slower than expected, putting pressure on same-store sales.

Margin risk remains a key focus for Trent

Trent’s EBITDA margins have remained stable at around 16-16.5%, but Taurani warned of downside risks. If the company invests in improving product quality to meet competition, margins could decline by 100 to 150 basis points in the coming quarters. Any margin compression could lead to further profit cuts and put pressure on valuations again.

Currently, Trent is trading at a FY28 price-to-earnings ratio of around 54x, significantly lower than peak figures, but still vulnerable if growth doesn’t recover.

DMart is better placed, but the online shift poses a structural risk

At Avenue Supermarts, Taurani said performance was relatively better, with no major negative surprises. However, LFL growth has slowed to around 5% due to the rapid expansion of quick commerce and online grocery platforms.

Store expansions remain DMart’s main growth driver and competitive intensity is lower than in fashion retail. Taurani believes margin risks for DMart are largely subdued, but structural challenges from digital channels could limit long-term growth below 20%.

Nykaa, Jubilant is preferred within the discretionary space

In beauty and personal care, FSN E-Commerce Ventures continues to post strong growth of over 25%, aided by limited competition in online BPC. Losses in fashion are narrowing and the segment is expected to reach breakeven in the coming quarters, although margin risks from high-speed trading and faster deliveries from e-commerce remain.

Within QSR, Taurani reiterated his positive view on Jubilant FoodWorks, citing stable like-for-like growth, strong delivery exposure and improving margins. He said the valuation re-rating would be dependent on an increase in EBITDA margins towards 21-22%.

Overall, Taurani says investors may find better risk-return in select value retail, QSR and platform-driven consumption, while large format fashion retailers face near-term headwinds from competition, margin pressure and changing consumer behavior.