Senco Gold share price jumps over 15%, hits new record high on strong Q3 update

Shares of Senco Gold spiked up 15.58% to hit a fresh lifetime high of ₹850 apiece in early trade on Thursday. This positive response from investors follows the release of the company's Q3FY24 business update on Wednesday after market hours.

The company marked its highest-ever Q3 revenue, experiencing a consistent trend across various geographies and channels. In Q3 FY24, the company achieved a revenue growth of 24% compared to the same period in the previous financial year and 26% YoY growth in the first nine months of FY24.

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This robust surge can be attributed to key factors such as the Dhanteras offer, pujo/festive offer, and wedding offerings, which helped in enhancing footfall and catalysing the sale in line with market sentiment, according to the company's exchange filing.

Notably, the company achieved nearly a 40% increase in footfall and a 6% rise in invoices, contributing significantly to overall growth. Despite the upward trend in gold prices, the company achieved a commendable 9% volume growth in gold and an impressive 27% volume growth in diamond jewellery.

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"The old gold exchange accounted for 33% of total sales made, and almost 70% of old gold was from non-Senco customers, indicating a shift from non-organised to organised and Senco as the preferred jeweller," the company said.

Same Store Sales Growth (SSSG) contributed about 17% out of the total 24% growth in Q3 FY24. The 9-month SSSG was 19% out of a total 26% YoY growth.

Meanwhile, the company achieved a consistent improvement in the stud ratio (Diamond Jewellery as a percentage of total turnover). Its showrooms achieved a stud ratio performance of 13.2% (achieving 190 basis points growth over 11.2% of last year's 9 months), while the blended (own showroom and franchisee room) stud ratio was 11.0% as against 9.7% during the same period of last year.

The company launched 19 showrooms over the last nine months, taking its overall showroom count to 155.

About Senco Gold

Senco Gold is a pan-India jewellery retail player with a history spanning more than five decades. The company’s products are sold under the brand 'Senco Gold & Diamonds’ through multiple channels, which include owned stores, franchise stores, and various online platforms.

Multibagger returns

The company's shares debuted on the Indian stock exchanges in July of last year at ₹405.3 apiece, a 28% premium over the issue price of ₹317. The stock continued its upward trend to date, reaching an all-time high of ₹850 per share in today's trade. Currently, the stock is trading at a 157% premium over its IPO price.

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Outlook

Earlier in December, domestic brokerage firm SBI Securities initiated coverage on the stock with a 'buy' rating, setting a target price of ₹920 apiece.

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The brokerage foresees significant growth prospects for Senco Gold in the Indian retail jewellery market, citing its strong legacy, focus on affordable jewellery, robust business model, growing presence across regions, and proper hedging practices.

At 10:00 am, the stock was trading with a gain of 11.56% at ₹820.90 apiece. 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.