Brokerage agency Emkay International has set the goal value of jewelry inventory Senco Gold whereas retaining ‘purchase’ ranking to ₹600 regardless of firm reported weak Q3 outcomes. The brokerage agency sees an upside potential as much as 85 per cent within the jewelry inventory.
“We additionally cut back our TP a number of by ~10% on decrease profitability/ROCE within the enterprise; this results in a ~23% minimize to our TP. Nevertheless, we see the ~50% correction in Senco (vs 52-week excessive) as unwarranted, and an assuring rationalization for the margin volatility needs to be the important thing catalyst for a re-rating,” the brokerage agency mentioned in a be aware.
Senco Gold’s inventory has declined by 60 per cent from its all-time excessive of ₹772 in October 2024 to ₹304 in February 2025.
The jewelry business is going through challenges because of the unprecedented surge in gold costs, affecting each buyer demand and jewellers’ profitability.
Senco Gold Q3 FY25 outcomes highlights
Senco Gold’s revenue after tax (PAT) noticed a pointy decline of 69.3 per cent year-on-year (YoY), falling to ₹33.48 crore in Q3FY25 from ₹109.32 crore in Q3FY24. Equally, the adjusted PAT dropped by 50.9 per cent year-on-year to ₹53.74 crore from ₹109.32 crore.
Regardless of the decline in earnings, the corporate recorded a robust 27.3% development in operational income, reaching ₹2,102.55 crore in Q3FY25, up from ₹1,652.20 crore in the identical quarter final yr.
In the meantime, EBITDA dropped 55.8 per cent year-on-year to ₹79.96 crore from ₹181.1 crore in Q3FY24. Adjusted EBITDA additionally noticed a major decline, reducing by 40.4 per cent to ₹107.55 crore in comparison with ₹181.1 crore within the earlier yr. In consequence, the EBITDA margin shrank sharply to three.8 per cent in Q3FY25 from 11.0 per cent in Q3FY24.
“Senco’s reported Q3 EBITDA missed our estimate by ~500bps. Nevertheless, a lot of the miss was led by hedging loss within the present quarter and hedging acquire within the base quarter, as adjusted gross-margin (GM) decline was restricted to solely 100bps (Exhibit 1). Q3 income development at 22% (14% SSG) was wholesome/in-line. Whereas the sizable GM volatility is underwhelming, Senco attributes the hedging impression to the extremely unstable gold-price atmosphere. General, development outlook of ~20% and 18-20 annual provides was retained; the adj GM decline is because of larger mixture of low-margin franchisee/exports and decrease studded combine, which the administration is hopeful of step by step recouping hereon,” brokerage agency Emkay International additional added.
Disclaimer: The views and suggestions offered on this evaluation are these of particular person analysts or broking firms, not Mint. We strongly advise buyers to seek the advice of with licensed specialists, think about particular person danger tolerance, and conduct thorough analysis earlier than making funding selections, as market circumstances can change quickly, and particular person circumstances could differ.
