Shares of Trent slumped nearly 11 percent in early trade on Tuesday after the Tata Group retailer's June quarter business update fell short of market expectations. The Q1 update prompted cautious commentary from brokerages despite continued growth in its store network.

The stock fell as much as 10.7 percent to Rs 2,9860 in the morning trade, extending opening losses, after the company reported a 19 percent year-on-year rise in standalone revenue for the June quarter. While the growth reflected continued expansion of its Westside and Zudio formats, it was slightly below analysts' expectations, and store additions were also lower than anticipated.

Trent had reported standalone revenue of Rs 5,666 crore for the June quarter, up from Rs 4,781 crore a year earlier. The company ended the quarter with 1,312 stores, comprising 301 Westside outlets, 982 Zudio stores and 29 stores across other lifestyle formats.

  • Share Markets Live Updates | Sensex, Nifty, GIFT Nifty Today

Overall, brokerages said Trent's June quarter update was slightly softer than expected, with revenue growth falling short of estimates and store additions moderating during typically the weakest quarter for network expansion. While most analysts did not view the slower pace of store openings as a structural concern, some flagged that the stock's sharp run-up in recent months had left limited room for disappointment.

The Street remains divided on the stock's near-term prospects. Bullish analysts continue to back Trent's long-term growth, citing the sustained expansion of its Westside and Zudio formats and the potential for further margin improvement. However, the cautious ones point to slowing store productivity, rising competition in the value-fashion segment and the possibility of store cannibalisation as key risks.

Despite the softer quarterly update, Trent continues to be viewed by several brokerages as one of the stronger long-term plays in India's organised apparel retail sector, supported by its aggressive store expansion strategy and the continued growth of its value-fashion chain Zudio. Ahead of the business update, HSBC had projected around 21 percent revenue growth for the quarter, driven by sustained momentum in Westside and Zudio. Bernstein had identified faster expansion of the Westside format as a potential additional growth driver alongside Zudio.

Trent had reported a 26 percent year-on-year increase in consolidated net profit for the March quarter, aided by healthy demand and continued expansion of its retail network. The company has remained one of the best-performing organised retailers in recent years, although investors are increasingly watching for signs of moderation in growth as its store base scales up.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.