Trent Ltd. (Westside): BUY or NOT

25th June, 2019, 11:26 am IST, Trent Limited was trading at Rs.433.50 and already up by 1.7% for the day. The uptrend has continued for the retail hand of the TATA group established in 1998. It has around 150 stores and a presence in over 80 major cities of India. It has breached its all-time high and bullish sentiments have taken over the stock, quite evident from the Technical graphs.

Daily Chart for 6-month time period of Trent Ltd. Picture taken from chartink and I all the rights of the pic are reserved with them.

TECHNICAL ANALYSIS

The stock has been in a continuous uptrend for the past 4 months and the higher green bars (compared to red) suggest that more volume is being traded in for buying trend and increase in share price value is here to stay. The share has continuously made 20-DMA (daily moving average) its support, which shall also act as the stop-loss for the stock.

The RSI is beyond 70 for the daily analysis, with strong Average Directional Index(ADX) of 36.29 and increasing difference in +DI and –DI. Both of them display traits of strong upward move. Aiding their analysis, the Bollinger Band Width is also increasing with CCI, MACD and ROC all showing positive trends. The RSI is increasing in the 2-hour chart as well as the weekly chart, suggesting that the stock can be tracked for swing trading. Since technical analysis only quantifies the market sentiments and is a lagging indicator, financial analysis shall help in taking a better decision.

FINANCIAL ANALYSIS

For those who are not well versed with the Technical analysis, can look at the Financials of the company, which I personally feel is a more important parameter for the health of the company. The management has always looked determined and positive in the previous quarters. In the last quarter, the net sales of the company were Rs.669 crores, up by 26.47% year-on-year. The quarter-4 profits have also been up, by almost 37% to Rs.16 crore.

This stock can be followed preferably for small to medium term trades. This is a high-risk stock for the time, with PE - 112.84 compared to the Industry’s – 59.2. Since the last year, the stock has gone above 35%. The current assets to liabilities have increased from 1.01 to 1.52 proving that the management and the board have worked hard and created significant assets for the company as well as reduced on in its immediate debts. Though it is known that the valuations of the company are stretched, one can still be interested in it as both the management and the parent company is a reliable and strong one.

BUY or NOT?

From the succinct discussion of what I have researched, I feel the company is in a 'BUY' zone and can see targets of Rs.460 very soon in the near future if the market does not get more weak and volatile. To stay safe, stop-loss should be encountered as the 20-DMA is breached. This breach would call for another analysis of whether to buy or sell.

Disclaimer: I am also a learning investor and do not persuade anyone for any kind of trade. I am not liable for anyone's loss. I have only shared my opinions and study for the reference of others.

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