Target: ₹1,025

CMP: ₹864.40

Strong y-o-y performance albeit margins were under pressure due to increased competition: Senco Gold reported robust sales growth of 39.7 per cent at ₹1,137 crore supported by higher footfall growth, rise in gold prices and attractive offers & launches during the quarter. EBITDA/PAT grew 31.5/23.6 per cent to ₹88 crore and ₹32 crore respectively.

EBITDA margin was under pressure due to heightened competition leading to more offers and discounts during the quarter. Senco’s EBITDA margin dropped 48 bps to 7.7 per cent, however, going forward the management aims to keep operating margin at about 8 per cent.

For FY24, Senco’s revenue grew 28.5% YoY to ₹5,241 cr. Retail revenue growth was 25 per cent y-o-y mainly led by higher SSSG of 19 per cent, higher stud ratio, higher export sales and 23+ new store. Diamond jewellery sales during the year grew 37 per cent while stud ratio improved 100 bps to 11.4 per cent in FY24.

We believe Senco has huge headroom to grow given its strong legacy in the jewellery business, expanding footprint through a strong and diverse distribution channel, focus on light affordable jewellery with better price point and healthy growth visibility from both its company operated and franchise stores.

We maintain Buy on the stock and upgrade our target price to ₹1,025 in 12-18 months.