Senco Gold eyes growth via global expansion, premium luxury leather bag collection in FY25

The company achieved revenue growth of 28.5% YoY and samestore sales growth (SSSG) of 19%. Revenue from exports improved from Rs 70 crore to Rs 208 crore. Profit after tax (PAT) increased by 14.2% from Rs 159 crore to Rs 182 crore.

Senco Gold and Diamonds, a company listed in 2023, is looking at growth possibilities in FY 25 through a wider international presence and expansion into premium lifestyle accessories, such as luxury leather bags, under the brand Sennes.

“The company made a decisive extension to its product mix through the introduction of Sennes, a sub-brand, that will offer jewellery accessories in line with premium lifestyles. This will deepen our recall for offering more than just standalone products but providing consumers with an enhanced consumer experience,” according to Suvankar Sen Managing Director & CEO, quoted in its annual report released on August 20.

Sennes, launched in 2024 offers luxury lifestyle products and jewellery including leather bags and lab grown diamonds. Senco Gold and Diamonds has, for the first time, forayed into the Dubai market.

Expansion plan in FY25

There are two growth possibilities for the company geographically and lifestyle product diversification. Sanjay Banerjee Chief Operating Officer of Senco Gold shared in the annual report that the company sees a wider international presence, initially in geographies marked by Indian expats where brand recall has been favourably established. The other opportunity is via extending into premium lifestyle accessories like a luxury leather bag collection (brand Sennes).

“We are optimistic of the company’s growth during the current financial year for the following reasons. One, the stores that we commissioned during FY 2022-23 should mature during the current financial year, generating an attractive revenue upside in FY 25. Two, the investments that we made in enhanced technologies and processes should translate into margin upsides. Three, the company’s prudent brand investments should enhance visibility and store footfalls, strengthening offtake. Four, the company’s governance focus will be sustained, strengthening its image as a responsible corporate citizen,” he said.

The report also mentioned that while the jewellery company maintained a market based on the number of stores in the eastern region it will also expand in the north, west, and south as a strong pan-Indian brand.

Out of the total IPO mobilisation of Rs 405 crore, Rs 270 crore was allocated to primary investors and Rs 135 crore to secondary investors towards OFS of existing shareholders (SAIF Partners, who fully exited following the IPO). Net of IPO expenses and a proportionate reimbursement by SAIF, there was a net capital inflow of Rs 248 crore, which was used towards working capital needs of the existing and new showrooms, shared the Sanjay Banka, CFO of the firm.

As of March 31, 2023-24, the Company had 159 showrooms covering approximately 1,19,405.51 square feet of retail space, spread across 96 cities and towns in 13 states. Additionally, franchisee showrooms are situated in non-metro tier-I and tier-II locations.

The company will continue to work efficiently to enhance profitability through sustained financial management practices, prudent capital allocation, and higher Gold Metal Loan (GML) proportion to reduce blended interest costs, he added.

Risks

However, the jewellery industry is highly competitive and could lead to price wars, reduced margins, and increased marketing expenses, the report stated. Impacted by frequent regulatory changes, inflation, and currency volatility, geopolitical tensions can impact the business.

“Regulatory developments, like compulsory hallmarking, mandatory HUID hallmarking on every jewellery, anti money laundering regulations, prohibitive regulations and limits on cash transactions, are creating a favourable environment for organised players,” it stated.

The report also mentioned a few risks such as frequent regulatory changes, hallmarking mandates, import duties, and tax reforms, which may pose compliance challenges and affect operational efficiency.

Economic uncertainty, including inflation and currency volatility, could impact consumer spending and raw material costs, affecting profitability and sales.

Supply chain disruptions caused by geopolitical tensions, wars in other countries, natural disasters, or logistical issues could affect the availability and cost of raw materials, leading to production delays and increased costs.

Global market dynamics, including changes in international trade policies and tariffs, pose further risks to export potential and profitability.

Additionally, rapid expansion or diversification without maintaining quality could lead to brand dilution and a loss of customer loyalty, while talent retention in a competitive market could be challenging

Outlook

The Indian jewellery industry is on a consistent growth trajectory having grown at an 8 percent CAGR in the 2018 to 2023 period and is likely to touch $ 145 billion by 2028, driven by an accelerated CAGR of 16 percent, according to the annual report.

The share of organised retail jewellers is likely to cross 60 percent by 2035.

“The company’s strategic focus will include enhancing its e-commerce and digital marketing efforts to better engage with customers and drive sales. By investing in cutting-edge technologies such as 3D printing, CAD, and augmented reality (AR), Senco Gold aims to offer innovative and unique jewellery designs that resonate with contemporary consumer preferences,” the report said.