Senco Gold shares drop 4% even after positive Q2 update; Here's why

In Q2, amid record-high gold prices and a high base effect stemming from the customs duty cut in the same period last year, revenue grew 6.5 per cent Y-o-Y

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Shares of Senco Gold fell over 4 per cent on Thursday as analysts flagged muted September quarter revenue growth due to high gold prices.

 

The jeweller's stock fell as much as 4.3 per cent during the day to ₹324.6 per share, the biggest intraday fall since August 8 this year. The Senco Gold stock pared losses to trade 3.7 per cent lower at ₹326 apiece, compared to a 0.19 per cent advance in Nifty 50 as of 09:31 AM. 

 

Shares of the company fell for the third straight session and currently trade at 11 times the average 30-day trading volume, according to Bloomberg. The counter has fallen 38.7 per cent this year, compared to a 6 per cent advance in the benchmark Nifty 50. Senco Gold has a total market capitalisation of ₹5,558.24 crore.   READ STOCK MARKET LIVE UPDATES

Senco Gold Q2 updates

Senco Gold reported a total revenue growth of 17.8 per cent year-on-year (Y-o-Y). The company’s retail business grew 16 per cent during the period, supported by a same-store sales growth of 7.5 per cent, it said in an exchange filing. 

 

In the second quarter, amid record-high gold prices and a high base effect stemming from the customs duty cut in the same period last year, revenue grew 6.5 per cent Y-o-Y. The company noted that its performance came amid seasonal factors such as the Shraddh period and a temporary shift in consumer spending towards capital goods following a goods and services tax (GST) reduction.

 

During the quarter, Senco Gold continued its retail expansion, opening five new showrooms and taking its total count to 184 stores (excluding Sennes stores).

 

Analysts at Motilal Oswal said that the company reported muted revenue growth due to high gold prices. However, it noted that store expansion is on track. The stock got a 'Neutral' rating from the brokerage with a target price of ₹385, implying an upside of 13 per cent.  ALSO READ | Prestige Estates share zooms 7% on robust Q2 sales; Analysts retain 'Buy'

Senco Gold Outlook

Looking ahead, the jeweller said it is on track to achieve its annual target of opening 20 new showrooms in FY26, with plans to launch seven to eight more outlets in the remaining quarters.

 

The company expects the third quarter to be the strongest of the year, buoyed by festive demand from Dhanteras and Diwali and the peak wedding season. Backed by a favourable economic environment and the GST rate cut, the company remains optimistic about consumer demand in the second half and reaffirmed its guidance of 18-20 per cent topline growth for FY26.