Conference Call with Senco Gold Management and Analysts on Q4FY25 & Full Year Performance and Outlook. Listen to the full earnings transcript.
Gems & Jewellery company Senco Gold announced Q3FY25 results Revenue from Operations for Q3FY25 stood at Rs 21,025.5 crore, marking a 27.3% YoY growth from Rs 16,522.0 crore in Q3FY24. EBITDA declined by 55.9% YoY to Rs 799.6 crore in Q3FY25, compared to Rs 1,811.0 crore in Q3FY24, with EBITDA margin contracting to 3.8% from 11.0%. Adjusted EBITDA stood at Rs 1,075.5 crore in Q3FY25, down 40.6% YoY from Rs 1,811.0 crore in Q3FY24, with Adjusted EBITDA margin reducing to 5.1% from 11.0%. Profit After Tax (PAT) declined by 69.4% YoY to Rs 334.8 crore in Q3FY25, compared to Rs 1,093.2 crore in Q3FY24, with PAT margin decreasing to 1.6% from 6.6%. Adjusted PAT stood at Rs 537.4 crore in Q3FY25, down 50.8% YoY from Rs 1,093.2 crore in Q3FY24, with Adjusted PAT margin reducing to 2.6% from 6.6%. Suvankar Sen, Managing Director & CEO, Senco Gold, said, “During the quarter, we received an overwhelming response to our Qualified Institutional Placement (QIP) and successfully raised Rs 459 crore, in testament of faith and trust of investor community. These funds have been utilized to repay short-term debt, support our expansion plans and arrange inventory for existing and new showrooms. Additionally, we also announced a 1:2 stock split on January 31, 2025, further enhancing shareholder value. High volatility was observed in gold prices during Q3, recording a 22% YoY increase and 20% increase since April 2024. However, consumer demand for gold remained robust throughout Q3. The reduction in customs duties during Q2 rather acted as tailwind for Q3 sales, especially during Dhanteras and Diwali. This quarter marked a milestone for us, as we achieved the highest-ever Q3 revenue of Rs 2,000 crore and a single-month revenue of Rs 1,000 crore during the Dhanteras month, reflecting a robust 22% YoY growth. In terms of jewellery wise performance on Value terms - we achieved 21% growth in Gold jewellery, 9% in diamond jewellery, 35% in silver jewellery, while our Gossip jewellery 18% growth. In terms of expansion, our showroom portfolio has grown to 171, including 70 franchisee showrooms. Over the past nine months, we have launched 12 new showrooms, 7 of which are company-owned. Looking ahead, we remain on track to open 8-10 new showrooms in Q4FY25, including 5-7 franchise outlets, in line with our earlier outlook. The short-term impact of lab-grown diamonds has temporarily affected the stud ratio; however, we remain confident that the diamond jewellery segment in which we primarily operate will rebound to lead us to 15% stud ratio. We are pleased to announce the incorporation of our wholly owned subsidiary, Sennes Fashion Limited, which will cater the consumer lifestyle segment. This strategic initiative will cover premium leather accessories, lab-grown diamond jewellery, and perfumes, allowing us to expand our customer reach and remain at the forefront of evolving market trends. To strengthen our brand presence, we launched new campaigns such as "Glow Karo, Grow Karo" for Everlite and "Khushiyon ki Reet" for our wedding collection, which have been well-received by customers. Our ongoing efforts to deepen market presence, introduce innovative products, and invest in customer-centric initiatives position us strongly for future growth.” Sanjay Banka (CFO), Senco Gold Ltd. commented, "We remain confident that given the long-term prospect of the Indian gems and jewellery which is presently USD 85- 90 billion, we will achieve 7%-8% EBITDA margin on an annualized basis excluding any one-off event. The lower EBITDA and PAT margin in the current quarter emanated due to custom duty impact while the adjusted 9 months EBITDA margin was 6.0%. We are likely to achieve 7%-8% EBITDA margin in Q4 and going forward based on our brand positioning and operating leverage and will try to further improve the sale by innovative offerings and premium pricing by being 2nd most trusted brand in jewellery domain. On the profitability front, EBITDA for the quarter stood at Rs 79.9 crore, while YTD EBITDA was Rs 240.6 crore. However, considering the adverse impact of customs duty in Q2 and Q3, amounting to Rs 29.8 crore and Rs 27.6 crore respectively, the adjusted EBITDA for the 9-month period stands at Rs 298.0 crore with an adjusted EBITDA margin of 6.0%. Similarly, PAT for the quarter was lower at Rs 33.5 crore, while the adjusted PAT for the quarter stood at Rs 53.8 crore, YTD PAT for the 9-month period was Rs 96.9 crore, with an adjusted PAT of Rs 138.8 crore. He emphasised that “We look at Gross Margin and EBITDA on YTD basis and have always maintained that due to gold price volatility on Quarter-to-Quarter basis coupled with hedging practices/ levels and IND AS 109 Accounting, it leads to uneven EBITDA % during quarterly reporting vis-a vis previous quarter or last year same quarter. The actual margins qualitatively remain range bound in 50- 100 basis points i.e. 7%-8% The margin may also vary as aforesaid due to factors like- Product Mix, Geographical Sales Mix, Studd Ratio, Channel Sales Mix etc. Please refer to below table for quarterly EBITDA trend over last 3 years whereby it is evident that incidentally the EBITDA margins in Q1 and Q2 of previous years were lower, while they were higher at 11%+ level in Q3. While this has been the past trend of last 2 years, however during the current year due to consistent gold price rise, Q1 and Q2 adjusted EBITDA margin was higher vis-à-vis earlier years, were higher while Q3 adjusted EBITDA margin was lower. But overall, the YTD GM level was 5%. On adjusting the custom duty impact the Q2 and Q3 Adjusted EBITDA margins has slightly improved by 120 basis points. Thus, effectively the adjusted EBITDA is lower against last 2 years YTD EBITDA of 7% range by only 90 basis points which translates to about ~Rs.44 cr, a part of which can be ascribed to lower stud ratio, higher export sales and opex increase. We have maintained above 80% hedge ratio during Q1 and Q2 as reported earlier and hence in the price rise scenario, hedging will result in adverse P&L; impact. We stringently follow hedge accounting as per IND AS 109 which is lying with the global IFRS Standards and duly audited by our statutory auditors; thus, the financial results as above reflect the true and fair view of the Gross Margin considering impact of derivative instruments like unfixed GML and MCX future instruments with MTM impact as well. As regards cash flow impact, custom duty reduction has surely impacted our OCF by Rs 57 crore but we are fully supportive of the noble intent of Hon’ble Finance Minister behind this decision. Further, if we look at the below table for the previous 11 quarters it is evident that on excluding the impact of hedge accounting the business model remains resilient and we have consistently 13%making charge revenue while the balance is contributed by diamond and gold price volatility net off our robust hedging practices. (YTD Avg/AHR- 81%) We believe that with full impact of custom duty reduction has already taken in 9-month results; and considering the present vibrant demand, we will be able to deliver 14-15% Gross Margin and 7%-8% EBITDA margin.” Result PDF