Buy Senco Gold Ltd for the Target Rs 575 by Emkay Global Financial Services Ltd
We reiterate BUY on Senco with unchanged TP of Rs575 (21x Jun-28E EPS), buoyed by better SSG performance in 1Q (39% vs 33%/28% for Tanishq/Kalyan), growing franchisee interest in non-core territories, and inexpensive valuations. Senco continued its strong topline momentum with ~67% yoy growth (~50% retail growth) and is targeting Rs200bn topline by FY30 (~24% CAGR over FY26-30). While reported EBITDA growth was slow at ~16%, like-for-like EBITDA growth remained healthy at ~30%, adjusting for 100-120bps of inventory gain called out in the base quarter. Senco expects margins to improve gradually, targeting 7.5-7.8% EBITDA margin in FY27 and +8% by FY30 (vs 7.0% in 1Q). Senco added 7 net stores in 1Q, of which 4 were franchise stores, and we see the emerging franchisee traction in non-core regions as a step toward strengthening its position as a pan-India jewelry brand. This is likely to help accelerate Senco’s asset-light expansion, as it plans to add 12-15 stores in 9MFY27, with emphasis on franchisee stores. Senco currently trades at an inexpensive 1-YF valuation of ~15x EPS.
Robust topline growth; reiterates its full-year EBITDA margin guidance
Senco delivered another robust quarter of strong revenue growth of ~67% yoy in 1Q (50% retail sales growth), led by 39% SSG and the rest through store adds. April witnessed strong traction, contributing ~55% of 1Q topline, while growth moderated in May. However, consumer sentiment improved in July, with sales growth at ~25% yoy. Senco expanded its network with 7 new stores in 1Q (excluding Sennes), of which 4 were opened via franchisees, taking the total store-count to 196 (89 franchisee stores). It expects to add 12-15 stores in the rest of FY27, with continued strategic emphasis on the franchisee model. Gross/EBITDA margin at ~16%/7%, was down ~300bps yoy, largely due to one-off hedging gains of ~100-120bps called out in the base quarter, higher competitive intensity, and exchange sales (~43% of sales). The management remains conservative and reiterated its annual guidance of 20-25% topline growth and EBITDA margin of 7.5-7.8%, and targets Rs200bn topline and +8% EBITDA margin by FY30.
Healthy traction in lightweight jewelry drives strong growth in diamond jewelry
Diamond jewelry saw strong growth of ~43% yoy in 1Q (18% volume growth), led by healthy traction in the light weight (sub-50k) category. Senco is expanding its lightweight jewellery portfolio beyond women-focused offerings with the launch of ‘Aham’, a new men’s jewellery collection featuring titanium combined with gold and diamonds. The company is among the early players in India to launch titanium jewelry and is offering the portfolio in the affordable price range of Rs20–Rs100k while retaining diamond content, which could support margins. Senco intends to continue prioritizing lightweight jewelry collections in FY27, supported by ongoing design innovation and affordability.
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