Neutral Senco Gold; target of Rs 400: Motilal Oswal

Neutral

Motilal Oswal's research report on Senco Gold

SENCO delivered consolidated revenue growth of 27% YoY to INR21.0b (in line) in 3QFY25, with an SSSG of 16%. The growth was driven by strong festive demand, and the healthy demand trend continued into Jan’25. However, the last 7-10 days saw a slowdown due to rising gold prices. The company opened five stores (+10% YoY) during the quarter, bringing the total count to 171 stores (100 COCO, 70 FOCO, 1 Dubai). It has planned to open 8-10 stores in 4Q, including 5-7 franchisee stores. However, there was a significant disappointment on the gross margin front. GM contracted sharply 740bp YoY to 11.3% (est. 17.7), even after adjusting the custom duty-related inventory loss of INR276m. This occurred despite a stable stud ratio YoY at 10.4% (11.1% in 2QFY25, 10.4% in 3QFY24). Hedging-related costs (>INR500m) from rising gold prices further impacted margins. It led to an EBITDA margin (ex-custom duty impact) contraction of 580bp YoY to 5.1% (est. 10.3%, 5.4% in 2QFY25). Adjusted EBITDA was down 41% YoY to INR1.1b.

Outlook

We also downgrade our rating from Buy to Neutral with a TP of INR400 at 25x Dec’26 EPS.

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Senco Gold - 17022025 - moti