Senco Gold shares dropped more than 60% from ₹772 in October 2024 to a 52-week low of ₹304.50. Following a sharp reduction in profitability for Q3FY25, ascribed to excessive costs and inventory losses, the stock has dropped by about 9% in a year and 32% in February alone.
After the jewelry retailer revealed a severe loss in profitability for the December quarter (Q3FY25), Senco Gold’s shares continued their precipitous plunge on February 17, plunging over 15% to their 52-week low. This brings the two-session loss to over 32 percent after a 20 percent drop in the prior session on February 14.
Significant Decline in Profitability:
Compared to ₹109.32 crore in the same quarter the previous year, Senco Gold’s consolidated profit after tax (PAT) fell by more than 69 percent year-on-year (YoY) to ₹33.48 crore in Q3FY25. The corporation blamed this drop on high expenses, squeezed margins, and significant inventory losses from customs taxes.
Revenue from operations increased 27.3 percent YoY to ₹2,102.5 crore, the highest quarterly revenue ever, from ₹1,652.2 crore in Q3FY24, despite the poor bottom-line performance. On the other hand, earnings before interest, tax, depreciation, and amortization (EBITDA) experienced a dramatic 56 percent decline, dropping from ₹181.1 crores to ₹79.96 crore—the EBITDA margin fell from 11.0 percent to 3.8 percent.
Senco Gold’s gross margin also declined, falling 740 basis points (bps) year over year to 11.3 percent, mainly due to inventory losses of ₹276 crore linked to customs duties and hedging expenses that exceeded ₹500 crore.
Notwithstanding the difficulties, the business is hopeful that margins will eventually return. As the effects of customs tariffs lessen, it anticipates that EBITDA margins will return to normal in Q4FY25, hovering around 7 to 8 percent.
Given that the Indian gem and jewelry market is presently worth between $85 and $90 billion, we are optimistic about its long-term prospects. Although customs duty-related effects were the leading cause of the lower EBITDA and PAT margins in Q3, our nine-month EBITDA margin was 6% on an adjusted basis. Sanjay Banka, CFO of Senco Gold, stated, “We anticipate achieving 7-8 percent EBITDA margins in Q4 and beyond, driven by our brand positioning and operational efficiencies.”
He also underlined that the business anticipates yearly EBITDA margins to stay in the 7-8 percent range but that hedging operations, accounting requirements, and the volatility of the gold price impact quarterly EBITDA swings.
Plans for Growth and Strategic Projects:
With 171 showrooms, including 70 franchisee shops, Senco Gold is still growing its footprint. Seven of the twelve new showrooms the firm has opened in the last nine months are corporate-owned. In keeping with its previous expansion strategy, it intends to open 8–10 new showrooms in Q4FY25, including 5-7 franchise locations.
We are happy to announce the creation of our wholly owned subsidiary, Sennes Fashion Limited, which will serve the consumer lifestyle market, said Suvankar Sen, Managing Director & CEO of Senco Gold, outlining the company’s future goals. This strategic plan will enable us to expand our offers and stay in line with changing consumer trends by including fragrances, lab-grown diamond jewelry, and high-end leather accessories.
Brokerage Views:
Target price changes have resulted from brokers’ worries about Senco Gold’s margin volatility. Oswal Motilal: The stock was downgraded from “provide” to “neutral” by the brokerage, which cited margin volatility and poor earnings visibility. It established a target price of ₹400, suggesting a 31 percent potential upside from present levels, and cut its profit expectations for FY25–FY27 by 25–30 percent.
Emkay Global: Although admitting the impact on margins, Emkay took a more balanced approach, pointing out that the reported Q3 EBITDA was 500 basis points below its projections. It was noted that hedging losses, not underlying operational flaws, were mainly to blame for the deficit. Citing lower profitability and return on capital employed (ROCE), the brokerage lowered its target price by 23% to ₹600 and down its PAT projections by 13–16%. Despite the poor quarter, Emkay said that Senco’s stock has corrected by about 50% from its 52-week high, which seems excessive, and that a more thorough explanation of margin volatility would lead to a re-rating.
Stock Performance:Â
On February 17, Senco Gold shares fell to a 52-week low of ₹304.50 intraday. Since October 2024, when the stock peaked at ₹772, it has already lost more than 60%.
The stock has dropped by over 9% in the last year. The losses have increased, with the stock down more than 32 percent in February. The stock has fallen 8 percent since October 2024, and t; this sixth consecutive month, it has declined. In January, it dropped more than 12 percent; in December, it dropped 7 percent; in November, it fell almost 6 percent; and in October, it dropped around 15 percent.
