HSBC’s Downgrade of Trent

HSBC downgraded its target price for Trent , a Tata Group retail and fashion company, from ₹6,700 to ₹6,600 per share, marking the second downgrade in a week. Despite maintaining a ‘Buy’ rating, the brokerage cited three key reasons for the adjustment. First, higher capital expenditure (capex) of ₹1,000–1,500 crore annually is expected to persist, leading to a marginal cut in FY27 and FY28 EPS estimates. Second, weak growth expectations due to subdued demand and sourcing challenges—particularly from Bangladesh—have dampened Q1FY26 performance, which grew only 20% YoY versus HSBC’s 34% forecast. Third, lower EPS projections based on reduced future earnings assumptions have directly impacted valuation. The stock has underperformed recently, falling nearly 9.4% in five days and over 20% in six months , as investors react to slowing growth and competitive pressures in the fast-fashion segment. With Nuvama also downgrading Trent earlier this week, the stock now faces heightened scrutiny amid mixed outlooks for near-term recovery. In a world, where growth is priced exorbitantly, any sign of degrowth is punished ruthlessly. This might be a normalization phase leading to timewise consolidation in Trent if there is no uptick in growth sooner.