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We reiterate BUY on Senco and our TP of Rs500 (25x Sep-27 EPS). The reiteration call is driven by an uplift in growth/margin outlook, improving franchisee interest in non-core regions, and undemanding valuations—which together offer a favourable risk-reward mix. After the topline growth disappointment in Q2 (6.5% retail growth), Senco has seen an exponential pick-up in Q3TD which has reflected in an improved growth outlook of 22-23% and EBITDA margin of 7.2-7.4% for FY26 vs initial guidance of 18-20% growth and 6.8-7.2% EBITDA margin. Senco is currently trading at an undemanding valuation, as it has liquid net assets worth ~Rs40bn (at cost) along with the brand making Rs8bn lifetime marketing spends, which together form ~70% of its EV. Senco’s EV-to-working capital is currently at 1.7x (vs 4-10x for other brands and contract manufacturers). Senco’s lifetime marketing investments of ~Rs8bn have helped it garner a customer base of ~3mn and 80 franchisees (~35% of revenue). Incrementally, Senco is seeing stronger franchisee interest in non-core regions (3 of the 7 franchisee stores in H1) and better topline growth trends outside the core eastern region. The exponential spike in Gold has impacted Senco’s RoE profile, though but we expect the RoE to inch back to ~15% by FY28E, helped by optimization of stock, lighter designs, and with the pick-up of volume growth in the business.

Light-weight strengths ensure better accessibility; focusing on new retail formats to cater to affluent/GenZ customers Leveraging its lifetime marketing spends of Rs10bn and multi-decadal liaison with experts in making lightweight jewelry (karigars), Senco offers better brand accessibility, which has assisted it in permeating deeper into tier-2/3 cities. Senco has established its strengths for light-weight products in most categories; this facilitates it in offering a similar look at lower grammage vs peers. Further, Senco is expanding its customer base (Affluent/GenZ) by offering a larger bandwidth of designs at its stores as well as with separate store formats like D’Signia/Everlite.

Focused non-East expansion improves medium-term growth headroom Given its light-weight strengths enabling franchisee interest and multi-decadal heritage, Senco has garnered unrivalled penetration in West Bengal (104 stores in ~60 cities vs a 15-30-city presence for peers). Senco’s marketing investments have also aided its extension into the adjoining eastern states (Bihar, Assam, Orissa, Jharkhand, the Northeast) and are now helping it drive asset-light franchisee interest in non-East regions (like Gwalior, Bikaner). Also, Senco’s focus on non-East (mainly the North for now) will supplement its expansion in core eastern areas.

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