Company Update : Senco Gold Ltd By Motilal Oswal Financial Services Ltd
Healthy revenue growth
Senco Gold (SENCO) released its pre-quarterly update for 4QFY25. Here are the key takeaways:
Industry update
* Gold prices continued their upward trajectory in 4Q, reflecting sustained bullish momentum.
* Consumer sentiment toward gold remained strong, with gold continuing to be viewed as a reliable store of value. Gold prices rose 11% QoQ and 33% YoY during the quarter.
* Over the past six months alone, gold prices surged 19%, reaching an alltime high of USD 3,150 per ounce.
* Persistent purchases by central banks throughout the year supported demand, significantly contributing to the price rally.
Business performance
* Wedding & festive demand: A robust wedding and festive season in 4Q significantly boosted business performance. This resulted in higher footfalls and a 6% increase in invoices, with Average Transaction Value (ATV) and Average Selling Price (ASP) rising 16% and 17%, respectively. Customer preference leaned toward yellow gold amid rising gold prices.
* Revenue growth: On a standalone basis, 4Q revenue grew 19% YoY (est. ~19% in 4QFY25, 27% in 3QFY25, 40% in 4QFY24), with retail revenue increasing 23% YoY. Growth in Tier 3 and Tier 4 towns outpaced that in metros and Tier 2 cities. Non-East India revenue crossed INR11b in FY25, up 23% from INR9.4b in FY24. Coin and bullion sales contributed less than 4% of overall gold sales, indicating a largely ornament-focused customer base.
* SSSG stood at 18.4% for 4Q and 14.6% for FY25.
* Studded jewelry sales grew 39% YoY during 4Q, compared to 9% in 9MFY25, leading to a 14% growth in FY25. The stud ratio improved slightly to 10.9% in FY25 vs 10.5% in 9MFY25.
* Old gold exchange: Volatile gold prices in 4Q led to a surge in old gold jewelry exchanges. Old gold contributed 40% to overall sales, with ~61% of it sourced from new (non-SENCO) customers in FY25.
* Jewelry purchase scheme: The company maintained a steady base of scheme customers, supporting future footfall and redemptions during upcoming festive seasons. The re-launch of the 18-month scheme aims to build a pipeline of loyal, long-term customers.
* Margin stability: The impact of customs duty reduction in 2Q and 3Q, along with other factors, led to margin contraction of 80-90bp, resulting in an adjusted EBITDA margin of 6.2%. However, strong diamond jewelry sales in 4Q are expected to improve margins, with EBITDA margin outlook remaining positive. The full impact of the customs duty cut was absorbed by 3Q, with no further margin headwinds seen in 4QFY25.
Store expansion
* In 4Q, the company opened four new showrooms under both Franchisee and COCO models at BT Road/Dunlop (Kolkata, WB), Budge Budge (Kolkata, WB), Ghatal (Medinipur, WB), and Varanasi II (UP).
* For FY25, 15 net new showrooms were launched, including six under the franchisee model.
* The total showroom count has now reached 175, comprising 72 franchiseeoperated outlets and one international showroom located in Dubai.
Other highlights
The company anticipates a robust start to FY26, driven by strong demand during key occasions such as Poila Baisakh, Akshaya Tritiya, and the ongoing wedding season. These events are expected to significantly contribute to 1QFY26 sales.
* The recent decline in gold prices is expected to further boost consumer demand in 1Q, aided by rising purchasing power.
* The company plans to open 5-7 new stores in 1QFY26, aligned with its full-year target of launching 20-22 new outlets under its own as well as franchisee models, aimed at strengthening its market presence.
* To deepen customer outreach, ~70 new Shop-in-Shop (SIS) outlets are planned, aiming to bring the total SIS store count to around 100 by Mar’26.
* The company has planned to open 5-7 new SENNES stores through its whollyowned subsidiary, Sennes Fashion Limited. These stores will cater to lifestyle product categories, including lab-grown diamonds, leather accessories, and perfumes.
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