Stock of this recently-listed jewellery retailer has zoomed 47% in 2 weeks

Senco Gold hit a new high of Rs 590.55, rallied 11% on the BSE in Wednesday's intra-day trade and now quotes at a hefty 86% premium over its issue price in little more than 2 months.

Shares of jewellery retailer Senco Gold hit a new high of Rs 590.55, as they rallied 11 per cent on the BSE in Wednesday’s intra-day trade amid expectations of strong growth.

In past two weeks, the stock has zoomed 47 per cent, as compared to 2.3 per cent decline in the S&P BSE Sensex. Currently, Senco Gold is trading at a 86 per cent premium over its issue price of Rs 317 per share. The company had raised Rs 405-crore through initial public offering (IPO) and made it stock market debut on July 14, 2023.

Senco Gold is a pan-India jewelry retailer with a strong brand presence. The company has been growing steadily in recent years and is well-positioned to benefit from the growing demand for gold jewelry in India.

The company’s IPO saw a strong response, with issue subscribed 77 times. The institutional investor portion of the issue was subscribed 191 times and the retail category 16 times. The two sub-categories for high net worth individuals (HNI) too saw huge 68 times oversubscription.

Senco Gold - run by fourth-generation entrepreneurs - is the largest organised jewellery retail player in the eastern region of India in terms of number of stores.  It primarily deals in gold and diamond jewelry along with jewelry made of silver, platinum, precious and semi-precious stones, and other metals. Besides this, it offers costume jewelry, gold, and silver coins, and utensils made of silver in its other offerings. 

In Q1FY24, Senco Gold rolled out 6 more showrooms (5 owned & 1 franchise) to reach the nationwide showroom of 142 amongst which 80 are company owned showrooms and 62 are franchisee owned. The six new showrooms have come up in Delhi (1), Madhya Pradesh (2), Sikkim (1), Telangana (1) and Bihar (1), the company said.

Senco Gold & Diamonds achieved highest-ever Q1 revenue of Rs 1,305 crore mainly on account of new store addition during the quarter, higher footfall, increased volume of Gold (8 per cent) & Diamond (34 per cent).

Emkay Global Financial Services initiated coverage on Senco Gold with BUY rating and target price of Rs 630 per share. According to analysts at the brokerage firm, Senco Gold boasts of being one of the top-2 as regards revenue share in the ~Rs 800 billion eastern market, abetted by strongest brand accessibility vs peers, in terms of product, price & penetration.

Growth headroom is huge, as it's market share is still at a mid-single-digit in the East, and focused efforts are afoot to capitalize on non-East prospects. Better access to capital, upbeat franchisee interest and shift to organized should drive a strong revenue-led EPS CAGR of >20 per cent for Senco in FY23-26E, analysts said.

Growth would be backed by near-equal input from new stores and SSG. Senco follows hygiene practices for sourcing/hedging gold (5 per cent stated policy), thus reducing the commodity’s volatility risk. Unit metrics are better than/in line with peers’ (ex Titan) and should further improve with rise in franchisee mix, the brokerage firm said.