Target: ₹1.277

CMP: ₹954.80

An all-India retailer of gold and diamond jewellery at various prices, Senco Gold has major market share in East with ~79% of its store presence (FY23) in the east India. With its focus on light-weight jewellery and extensive retail network, it aims to cater to a wider customer base. ts hub-and-spoke approach helped it expand to new regions and lever the logistical efficiency of stocks and return on capital.

Its key strengths are innovation, intricate designs, product quality and finish and ability to recognise consumer preferences and market trends. The vast variety of its jewellery is handcrafted by skilled karigars, third-party vendors or in-house. Most of the gold required is sourced via banks’ gold-loan facilities, with hedging policies minimising the risks of gold-price fluctuations.

The company has an effective inventory management system and focuses on levering technology to drive efficiencies.

We build in 23/28/36 per cent revenue/EBITDA/PAT CAGRs over FY24-26. We initiate coverage on the company with a Buy, valuing it at 28x FY26e P/E to arrive at a target price of ₹1,277.

Risks: More working capital, higher regulatory requirements, keener competition.