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    Senco Gold

    SENCOGood
    Consumer Durables·20 Nov 2025
    Management Summary

    Senco Gold reported a strong increase in profitability for Q2 FY26 despite tepid revenue growth, primarily driven by margin expansion and a significant rebound in sales during October. The company maintained its full-year growth guidance, focusing on lightweight and studded jewellery, and is confident in achieving its revenue and margin targets, leveraging strong festive and wedding season demand.

    Highlights

    8

    • Consolidated PAT for Q2 FY26 jumped by nearly 300% YoY to INR 48.8 crore, with adjusted PAT growing 43%.

    • Consolidated revenue for Q2 FY26 grew by 2% to INR 1,536 crore, while standalone revenue grew by 6.6%.

    • EBITDA margin improved significantly YoY by 340 bps to 6.9% on a consolidated basis.

    • The company recorded highest-ever sales of over INR 1,700 crore in October alone, representing approximately 50% YoY growth.

    • Trailing 12 Months (TTM) sales have crossed INR 7,400 crore, and YTD revenue (up to Oct 25) stands at INR 5,000 crore with 25% value growth.

    • Q2 SSSG was -4% due to purchase deferment, but H1 SSSG was +8%, and YTD (up to Oct 25) SSSG stands at 17%.

    • The stud ratio remains strong at approximately 12%, and old gold exchange transactions increased to 42% in Q2.

    • Net debt-to-equity ratio remains comfortable at 0.75, with total inventory increasing to INR 4,200 crore.

    What Changed3

    vs Q3 FY26

    Guidance items8 → 17 (+9)Risks discussed3 → 4 (+1)Q&A highlights8 → 3 (-5)
    Key financials

    Metrics

    9

    Periods

    2

    Headline

    8
    • Consolidated Revenue
      ₹1,536 Cr
      YoY+2%
    • Standalone Revenue Growth
      6.6%
    • Consolidated PAT
      ₹48.8 Cr
      YoY+3%
    • Adjusted PAT Growth
      43%
    • Consolidated EBITDA Margin
      6.9%

    TTM

    1
    • Sales
      ₹7,400 Cr

    Guidance & targets

    17
    CategoryTargetPriority
    Revenue
    Full Year Revenue Growth
    INR 7,400 crores
    		High
    Revenue
    Full Year Revenue Growth
    20%
    		High
    Revenue
    Full Year Revenue Growth
    22%
    		Medium
    Profitability
    ROE and ROCE
    increasing
    		Low
    Profitability
    PAT
    INR 20 crore
    		Medium
    Margin
    Sustainable EBITDA Margin
    7.2% to 7.5%
    		High
    Margin
    EBITDA Margin
    7.2% to 7.4%
    		High
    Margin
    Minimum EBITDA Target
    7%
    		High
    Product Mix
    Stud Ratio
    20-30 basis points more
    		Medium
    Product Mix
    Stud Ratio
    13% to 13.5%
    		High
    Borrowing Mix
    GML Mix
    75%
    		Medium
    Store Expansion
    New Franchisees
    4 to 6
    		High
    Store Expansion
    New Stores Contribution to Growth
    6% to 8%
    		Medium
    Store Expansion
    Future Growth Store Mix (East & North)
    80%
    		High
    SSSG
    SSSG Growth (stable gold price)
    12% to 14%
    		Medium
    Working Capital
    Working Capital Borrowing Limit
    INR 2,400 crore
    		High
    Working Capital
    Working Capital Borrowing Limit
    INR 3,000 crore
    		Medium

    Risks & concerns

    5
    RiskSeverity

    Gold price volatility leading to margin calls on Gold Metal Loans (GML)

    Extreme volatility in gold prices led to frequent margin calls on GML, prompting a shift to Cash Credit (CC) to manage pressure, despite higher interest rates. — Management acknowledged

    medium

    Slower Q2 growth in Eastern India due to Durga Puja timing and GST changes

    The concentration of stores in Eastern India (60-65% of business) meant Q2 sales were impacted by specific regional factors and consumer deferment, though October saw a strong rebound. — Management acknowledged

    medium

    Competitive market pressure affecting pricing and margins

    The market is quite competitive with some players offering discounts, but Senco maintains its brand image by focusing on new designs and attractive offers rather than discounting. — Management acknowledged

    medium

    Potential slowdown during election periods

    Management noted that election periods typically see a slight slowdown for 15 days to a month, requiring proactive planning for inventory and customer outreach. — Management acknowledged

    low

    Areas of Evasion(1)

    • Specific gross margin data for studded products and karat-wise revenue/margin percentages were deemed confidential.

    Q&A highlights

    3

    “the GML mix was lower in Quarter 1, and that is why from around 65% level, it had come to 51% level. Although GML availability had improved in Quarter 2, but once again, as you are aware, GML is on an unfixed basis. And due to the extreme volatility in the gold prices, we were receiving a lot of margin calls. So, to avoid the margin call pressure, we resorted to CC instead of GML.”

    Reveals the company's strategy to manage gold price volatility and its impact on borrowing mix and associated costs.

    asked by Videesha Sheth from Ambit Capital

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 Performance & Strong October Rebound

    Senco Gold reported a Q2 FY26 consolidated PAT of INR 48.8 crore, marking a nearly 300% YoY increase from INR 12.1 crore, with adjusted PAT growing 43%. Consolidated revenue grew modestly by 2% to INR 1,536 crore, while standalone revenue saw a 6.6% growth. Despite a slower Q2, attributed to high gold prices and regional factors, the company achieved its highest-ever monthly sales of INR 1,700 crore in October, a 50% YoY increase. YTD revenue has crossed INR 5,000 crore, with YTD value growth at 25%.

    02

    Profitability & Margin Expansion

    EBITDA margins significantly improved by 340 bps YoY to 6.9% on a consolidated basis in Q2, with EBIT margins expanding by 360 bps to 6.9%. For H1, EBITDA stood at Rs 290 crore with a margin of 8.6%. Management reiterated its sustainable EBITDA margin guidance of 7.2% to 7.5% for the full year, aiming for a minimum of 7%. The company expects an additional INR 20 crore to PAT for the full year due to GML rate adjustments.

    03

    Strategic Growth & Store Expansion

    The company launched 6 showrooms in Q2, bringing the H1 total to 16 new showrooms (11 franchisee, 5 COCO). Management plans to open 4-6 more franchisee stores, primarily focusing on Tier 2, 3, and 4 cities in East and North India, which are expected to contribute 80% of future growth. The trailing 12-month sales have crossed INR 7,400 crore, reinforcing confidence in achieving the full-year revenue target.

    04

    Product Mix & Consumer Trends

    The stud ratio remained strong at approximately 12% in H1, with aspirations to increase it to 13-13.5% by FY27. Old gold exchange transactions increased significantly to 42-43% in Q2, up from 35% a year ago. Consumers are adapting to high gold prices by opting for lighter-weight jewellery (weights down 10-12%) and lower karat options (9k, 14k) to fit their budgets. The average selling price (ASP) increased by 16% to INR 86,200.

    05

    Working Capital & Hedging Strategy

    Total inventory increased from INR 3,500 crore to INR 4,200 crore, driven by Dhanteras preparedness and new store rollouts. Sales hedging is maintained at 90-100%, while inventory hedging is at 65-70%. Due to gold price volatility and margin calls, the GML mix dropped to ~51% in H1FY26, with the company resorting to Cash Credit. Working capital limits are expected to increase to INR 2,400 crore by March '26 and potentially INR 3,000 crore by March '27.

    06

    Regional Dynamics & Competitive Edge

    Eastern India, accounting for 60-65% of the business, experienced slower Q2 growth but rebounded strongly in October. Non-Eastern markets are witnessing robust growth upwards of 25% YTD. Senco differentiates itself through a wider range of jewellery designs, catering to various ticket sizes, and maintaining its brand image without resorting to heavy discounting, focusing on innovation and customer relationships.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.