Senco Gold Ltd., incorporated in the year 1994, is a Small Cap company (having a market cap of Rs 8639.15 Crore) operating in Gems and Jewellery sector.
Senco Gold Ltd. key Products/Revenue Segments include for the year ending .
Investment Rationale
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, in line with muted trends seen in TTAN. However, a big 900bps duty cut on gold and return of operating normalcy has driven a strong recovery with FY25TD retail growth climbing to ~20%.
Senco has retained its FY25 growth outlook of 18-20%. The EBITDA margin beat of ~250bps was led by better franchisee terms, lower discounting/better gold premium, and a low-margin base as hedging remained at ~95% in Q1. While the duty cut significantly improves medium-term prospects, Senco expects a short-term hedging loss of Rs0.5bn, which shall be distributed over the next 2-3 quarters.
Margin beat drives a ~12% upward revision to our earnings estimates. Senco is trading at considerable discount to peers despite similar or better operating performance. We increase our TP multiple by 5% and revise TP up to Rs1,400/sh (based on 32x Sep-25E EPS).
Financials
For the quarter ended 30-06-2024, the company has reported a Consolidated Total Income of Rs 1416.18 Crore, up 23.13 % from last quarter Total Income of Rs 1150.12 Crore and up 7.71 % from last year same quarter Total Income of Rs 1314.85 Crore. Company has reported net profit after tax of Rs 51.27 Crore in latest quarter.
Promoter/FII Holdings
Promoters held 68.45 per cent stake in the company as of 30-Jun-2024, while FIIs owned 7.72 per cent, DIIs 10.46 per cent.
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