Current Rating and Its Significance
MarketsMOJO’s 'Sell' rating on Trent Ltd. indicates a cautious stance for investors, suggesting that the stock may underperform relative to the broader market or its sector peers in the near term. This rating is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. The rating was revised on 01 July 2025, when the Mojo Score dropped from 58 (Hold) to 37 (Sell), reflecting a significant reassessment of the stock’s prospects.
Here’s How Trent Ltd. Looks Today
As of 28 December 2025, Trent Ltd. is classified as a large-cap company operating in the Garments & Apparels sector. The stock has experienced a challenging year, with a 1-year return of -39.35%, markedly underperforming the BSE500 index, which has delivered a positive 5.76% return over the same period. This divergence highlights the stock’s relative weakness in the current market environment.
Quality Assessment
Trent Ltd. maintains a 'good' quality grade, supported by a robust Return on Capital Employed (ROCE) of 26.8%. This metric indicates efficient utilisation of capital to generate profits, a positive sign for long-term investors. Despite the stock’s recent price weakness, the company’s operational fundamentals remain solid, with profits rising by 19% over the past year. This suggests that the underlying business continues to perform well, even if market sentiment has been unfavourable.
Valuation Considerations
The valuation grade for Trent Ltd. is 'very expensive', reflecting a high Enterprise Value to Capital Employed (EV/CE) ratio of 20.3. This elevated valuation implies that the market is pricing in strong future growth or premium quality, which may not be fully justified given the stock’s recent underperformance. The company’s Price/Earnings to Growth (PEG) ratio stands at 5, signalling that earnings growth expectations are high relative to the current price. Investors should be cautious, as such valuations can limit upside potential and increase downside risk if growth disappoints.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend Analysis
The financial grade for Trent Ltd. is 'flat', indicating that recent financial performance has been stable but without significant improvement or deterioration. The company reported flat results in September 2025, with no key negative triggers identified. This stability suggests that while the business is not currently accelerating growth, it is also not facing immediate financial distress. Investors should monitor upcoming quarterly results for any signs of change in this trend.
Technical Outlook
From a technical perspective, Trent Ltd. holds a 'bearish' grade. The stock’s price movements over recent months have been weak, with a 6-month return of -29.83% and a 3-month return of -8.49%. The one-day change as of 28 December 2025 was a slight decline of 0.12%, reflecting ongoing selling pressure. This bearish technical stance suggests that momentum remains negative, and the stock may face resistance in reversing its downtrend in the near term.
Market Performance Context
Despite the company’s solid quality metrics, the stock’s performance has lagged significantly behind the broader market. While the BSE500 index has delivered positive returns over the past year, Trent Ltd. has generated negative returns of nearly 40%. This underperformance may be attributed to the combination of high valuation, flat financial trends, and bearish technical signals, which collectively weigh on investor sentiment.
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What This Rating Means for Investors
For investors, the 'Sell' rating on Trent Ltd. serves as a cautionary signal. It suggests that the stock currently faces headwinds that may limit capital appreciation in the near term. The combination of a very expensive valuation, bearish technical indicators, and flat financial trends outweighs the company’s good quality metrics and profit growth. Investors should carefully consider these factors before initiating or increasing exposure to the stock.
However, it is important to note that the company’s strong ROCE and profit growth indicate underlying business resilience. Long-term investors with a higher risk tolerance may view the current weakness as a potential entry point, provided they monitor valuation and technical developments closely.
Summary
In summary, Trent Ltd. is rated 'Sell' by MarketsMOJO as of 01 July 2025, with the current analysis reflecting data as of 28 December 2025. The rating is justified by a combination of very expensive valuation, bearish technical outlook, flat financial trends, and good but not exceptional quality. The stock’s significant underperformance relative to the market underscores the challenges it faces, making it a less attractive option for risk-averse investors at present.
Investors should continue to track quarterly results, valuation shifts, and technical signals to reassess the stock’s outlook over time.
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