Senco Gold Q4 FY26 earnings call

Senco Gold reported a strong Q4 FY26 with revenue crossing ₹1,997 crores, EBITDA of ₹274 crores, and PAT of ₹157 crores. This represents a YoY growth of 45% in revenue, 116% in EBITDA, and 151% in PAT for the quarter. For the full fiscal year 2026, the company achieved a record revenue of ₹8,430 crores, marking a 33% YoY growth. The gross margin and EBITDA were higher than earlier guidance, with Q4 EBITDA at 13.7% and FY26 EBITDA at 11.5%.

The old gold exchange program has been a significant growth driver, contributing approximately 50% of total revenue in Q4 FY26 and 44% for the full year, up from 25-30% a few years ago. This initiative aligns with the Prime Minister's appeal to promote recycled gold and reduce imports. The company is also focusing on 9-carat and 14-carat lightweight jewellery, creating over 1.5 lakh designs annually, to make products more affordable and accessible to a wider customer base, including younger generations.

Senco Gold is expanding into new geographies, with stores opened in Rajasthan, Central Maharashtra, and Western UP during FY26. The company plans to open 18-20 new stores in FY27, primarily through the franchise model, with a focus on Tier 2, 3, and 4 towns. The strategic focus for expansion is weighted 60% towards East India (core market) and 30-40% towards North and Central India, with a strong pipeline for Bihar and UP.

The company faced extreme gold price volatility in Q4, with international prices fluctuating between $5,600 and $4,400-$4,500. Despite this, Senco Gold maintained a hedging ratio of 40-50% to balance risk and liquidity. Inventory days increased to 186, up from 166 days last year, partly due to pre-election inventory buildup for April sales and the rising gold prices. Management aims to reduce inventory days to 160-180 through technology-driven transfers and optimized stock.

For FY27, Senco Gold provides a conservative revenue growth guidance of 18-20%, targeting an implied revenue of ₹10,000-₹10,500 crores. The sustainable EBITDA margin is projected to be 7.5-7.8%, and PAT margin is expected to be 4.0-4.5%. Management expressed confidence in achieving the PAT margin due to growth in diamond sales, making charges on lightweight jewellery, and an increased mix of lower-caratage products.

The company proposed a final dividend of 20% for FY26, in addition to the 15% interim dividend already announced. The GML (Gold Metal Loan) declined in Q4 due to a cash flow mismatch caused by a sharp gold price spike, leading to increased borrowing costs. However, the company intends to restore the GML portion to over 50% to leverage its lower borrowing cost of 3-3.5%. The credit rating was upgraded one notch by ClearEdge, with further improvement expected from ICRA.

The Sennes brand, focusing on lab-grown diamonds and lifestyle products, now has 12 exclusive stores and is EBITDA-positive in its second year. Sennes products are also sold through Senco stores. The company continues to innovate with new designs, particularly in lightweight and lower-caratage (9-carat, 14-carat) jewellery, to cater to evolving consumer preferences and budgets, ensuring value for money.