Senco Gold Ltd. share price target

We maintain BUY on Senco with an unchanged TP of Rs500 (25x Jun-27E EPS), as a 4-5% cut in estimates on higher interest expense is completely offset by rollover to Jun-26E TP.

SENCO delivered consolidated revenue growth of 27% YoY to INR21.0b (in line) in 3QFY25, with an SSSG of 16%. The growth was driven by strong festive demand, and the healthy demand trend continued into Jan’25.

SENCO delivered consolidated revenue growth of 31% YoY to INR15.0b (in line) in 2QFY25. SSSG was at 20% (vs. 4% in 1QFY25, 19% in 2QFY24).

We see significant re-rating scope for Senco, helped by our expectations of a strong pick-up/SSG outperformance in Q2 and valuation discount vs P N Gadgil (PNG) after its ~70% listing gain.

Senco reported a big beat to our Q1 EBITDA/PAT estimates led by better gross margin (up by ~500bps YoY). The sudden spike in gold price and operating challenges led to a modest retail revenue growth of 11% in Q1.

SENCO’s consolidated revenue grew 8% YoY to INR14,039m (est. INR15,469m) in 1QFY25.

Store expansion propelling growth

After a strong revenue update of 39%/28% growth in Q4/FY24, Senco reported
lower margin decline at 40bps in Q4 vs. our estimate of 70bps. In our view, a
better margin was aided by stronger operating leverage, as gross-margin
decline was in line (down 160bps).

The Senco stock reacted positively (+18% intra-day) on the back of a
significant beat to our estimates and its SSG outperformance vs. listed jewelry
peers in Q4/FY24. Senco delivered 30% retail growth in Q4 (vs. our expectation
of 21%), helped by a robust 23%/19% SSG in Q4/FY24. For full-FY24, Senco
has delivered 28% topline growth compared with ~20%/34% for TTAN/Kalyan.

Senco Gold reported robust sales growth of 23.3% YoY at Rs 1,652 cr which was supported by huge response from festivals such as Dhanteras, Navratri, Durga Puja, Diwali and high number of weddings during the quarter. The company’s blended studded sales ratio increased to 11.8% from 11.4% in 2QFY24.

Senco Gold Limited is pan-India jewellery retail player with a history of more than five decades. primarily sell gold and diamond jewellery and also sell jewellery made of silver, platinum and precious and semi-precious stones and other metals.

The company boasts an expansive catalogue with more than 120,000 designs for gold jewellery and more than 69,000 designs for diamond jewellery. It offers a variety of designs of handcrafted jewellery, most of which are designed and manufactured in-house in collaboration with over 170 skilled local craftsmen in Kolkata and across the country.

Senco is the leading pan-India jewelry retailer with over five decades of experience, led by a fourth-generation entrepreneur in the industry. As the largest organized jewelry retail player in eastern India, they have the widest presence in non-eastern states among jewelry retailers in the region.

Senco Gold is a pan-India jewellery retail player with a history of more than five decades and has a fourth generation entrepreneur in the jewellery industry as its Promoter. It is the largest organised jewellery retail player in the eastern region of India based on number of stores and among eastern India based jewellery retailers, it is the widest geographical footprint in non-eastern states.

Senco is a pan-India jewellery retail player with a history of more than 5
decades. Senco is the largest organized jewellery retail player in the eastern region of India based on number of stores and among eastern India based jewellery retailers, they have the widest geographical footprint in non-eastern states.

Senco's main product lines include gold, diamonds, platinum, silver, studded gold jewellery, and gold and silver coinage. They also market other goods like silver utensils and costume jewellery.

Senco Gold Limited is among very few retail players selling gold and diamond jewellery in organized space, which will
be key beneficiary to take advantage of consumer behavior shift from unorganized space to organized space. Compa-
ny’s past financial performance is also robust as its revenue and profit after tax has grown by 24% and 61% in terms of 2
year CAGR respectively.

With a catalogue offering more than 108,000 designs for gold jewellery and more than 46,000 designs for diamond jewellery, they offer a large variety of designs of handcrafted jewellery, most of which are designed and manufactured in-house by their designers in close collaboration with skilled local craftsmen (Karigars) in Kolkata and across the country.

Senco Gold Limited believes that its more than five decade track-record evokes consumers’ trust in its products. To ensure transparency for its customers, the company has been BIS hallmarking its jewellery for all gold jewellery, since 2012, prior to the regulatorily mandated hallmarking which
started from May 2021.