Neutral Senco Gold; target of Rs 375: Motilal Oswal

Motilal Oswal's research report on Senco Gold

Senco Gold (SENCO) delivered a consolidated revenue growth of 2% YoY, witnessing a sharp deceleration after clocking 30% growth in 1Q. The retail revenue growth was 6%, with same store sales declining 4%. The performance was quite tepid, as most other listed jewelry companies reported double-digit same store sales growth in 2Q. According to management, footfalls were weak due to high gold price inflation and extended rains.

Outlook

Given the inconsistencies in operating performance and low hedging ratios, we remain cautious on SENCO’s operating margin performance going ahead. We reiterate our Neutral rating with a TP of INR375.