Trent Shares Drop 7% as Q2 Shows Slower Growth, Margin Pressure

Trent’s share price fell nearly 7 percent in early trade after the company announced its Q2 FY26 results. The market reacted sharply because, even though Trent reported an 11 percent year-on-year rise in consolidated net profit, several signs pointed to slower business momentum. The biggest concern came from the subdued performance of key brands, especially the budget-fashion chain Zudio and the higher-end format Star, which the article described as showing “tepid performance”. These two brands have been important growth engines for Trent, so any slowdown immediately raises caution.

Brokerages also appeared divided in their outlook. Motilal Oswal maintained a Buy rating with a target price of around ₹6,000, suggesting nearly 30 percent upside from current levels. They expect Trent’s revenue, EBITDA, and PAT for FY26–28 to grow at strong CAGRs of 17 percent, 20 percent, and 14 percent. But other brokerages were more cautious, pointing to weaker underlying growth, margin pressure, and the possibility that Trent’s earlier fast-growth phase may now be slowing.

Financial data from Moneycontrol supported these concerns. Revenue from operations grew about 17 percent YoY to ₹4,724 crore, up from ₹4,036 crore last year. But net profit increased only 6.45 percent YoY to ₹451 crore, which is much lower than the profit jump seen in earlier quarters. More importantly, the operating margin (EBIT margin) fell from 11 percent last year to 10.2 percent this quarter. This margin compression suggests higher costs or weaker pricing power, two factors that can weigh on profitability if they continue.

The market’s reaction becomes clearer through this lens. Investors were expecting strong revenue momentum, steady margins, and faster growth from Zudio and Star. Instead, they saw slower growth, margin pressure, and signs of deceleration in Trent’s previously high-performing brands. With Trent trading at high valuations, any slowdown affects how much premium investors are willing to pay for future growth. This re-rating likely triggered the 7 percent drop in the share price.

For investors, the takeaways are mixed. Long-term investors may still find comfort in Motilal Oswal’s positive view, the expected growth trajectory, and the company’s strong retail franchise. But short-term investors may stay cautious until there are clear signs of growth acceleration, better margins, and stronger trends in Zudio and Star. The key metrics to watch in coming quarters include same-store sales growth, store addition pace, cost control, and whether revenue growth can climb back toward the 20 percent-plus range seen earlier.

Overall, Trent’s Q2 performance shows a company that is still growing, but at a slower pace, with the market now watching closely to see whether the growth story regains speed or enters a more moderate phase.