Shares of Senco Gold remained under pressure for a second session in a row, plunging 15 percent on February 17 as investor sentiment took a hit following the company's disappointing Q3 show. With today's slump, the stock has cumulatively lost around 32 percent of its value in the two-day correction.
At 11.21 am, shares of Senco Gold were trading at Rs 313.30 on the NSE. The fall was further exacerbated by a spike in trading volumes in the counter. As much as 49 lakh shares of the company changed hands on the exchanges thus far, already higher than the one-month daily traded average of eight lakh shares.
Senco Gold's EBITDA margin took a hit in Q3, dropping to 3.8 percent, a sharp decline from the 11 percent reported in the same period last year, largely due to higher costs associated with launching new subsidiaries.
The management attributed the margin variance to the impact of customs duty over the last two quarters and overall gold price volatility. The company had previously expected EBITDA margins to fall within the 7-8 percent range.
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This weak operational performance also affected Senco Gold's bottom line, with net profit slumping to Rs 33.5 crore, compared to Rs 101.3 crore in the same quarter last year. However, the company’s revenue remained strong, hitting a record high of Rs 2,100 crore, a 27 percent increase from the previous year.
Despite the high volatility in gold prices, which surged 22 percent year-on-year and 20 percent since April 2024, consumer demand remained robust. The reduction in customs duties during Q2 helped boost Q3 sales, particularly during Dhanteras and Diwali, as per the management.
Looking ahead, Sanjay Banka, CFO of Senco Gold, expressed confidence in the company achieving a 7-8 percent EBITDA margin on an annualised basis, excluding any one-off events, driven by the long-term growth prospects of the Indian gems and jewelry industry. He further stated, "We are likely to achieve a 7-8 percent EBITDA margin in Q4 and beyond, supported by our strong brand positioning and operating leverage. Additionally, we aim to further boost sales through innovative offerings and premium pricing," Banka said.
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