Senco Gold share slips 10% on heavy volumes; tanks 71% from October high

In past one month, the stock price of Senco Gold has slipped 36 per cent after the company had reported a weak operational performance in the December 2024 quarter.

Senco Gold share price: Shares of Senco Gold have hit a 18-month low of Rs 227.70, falling 10 per cent on the BSE in Monday’s intra-day trade amid heavy volumes. The stock price of this jewellery retailer is trading at its lowest level since September 2023. 

 

It has corrected 71 per cent from its record high level of Rs 772 touched on October 7, 2024. The stock had hit a record low of Rs 179.13 on July 21, 2023. Senco Gold made its stock market debut on July 14, 2023. It issued shares at a price of Rs 158.50 (adjusted to 1:1 stock split). On January 31, 2025, the stock turned ex-date for stock split from Rs 10 to Rs 5.

 

 

At 01:15 PM; Senco Gold shares were trading 8 per cent lower at Rs 233.45, as compared to 0.3 per cent rise in the BSE Sensex. The average trading volumes on the counter jumped over two-fold today. A combined 1.82 million equity shares have changed hands on the NSE and BSE. 

 

In the past month, the stock price of Senco Gold has slipped 36 per cent after the company reported a weak operational performance in the December 2024 quarter (Q3FY25).  ALSO READ | NACL stock soars 60% in 4 days on Coromandel's plan to buy majority stake

 

The company's adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) margin contracted to 5.1 per cent in the December 2024 quarter (Q3FY25) from 11 per cent in Q3FY24. The company had guided for an Ebitda margin in the range of 7 per cent and 8 per cent.

 

Besides, the company's profit after tax declined 69 per cent year-on-year (Y-o-Y) to Rs 33.48 crore, compared to Rs 109.32 crore in Q3FY24. The company attributed its weak Ebitda and profit after tax (PAT) growth due to custom duty impact of Rs 27.6 crore.

 

The management, however, believes that as the full impact of the custom duty reduction has already been factored in the 9-month results, the company will be able to deliver 14-15 per cent gross margin and 7 per cent-8 per cent Ebitda margin in Q4FY25 and beyond. 

 

Meanwhile, the unsatisfactory explanation for the sharp contraction in gross margin in Q3FY25 has undermined Motial Oswal Financial Services (MOFSL) confidence in the margin trajectory going forward. Peers have also reported Q3 results, but the brokerage firm said they have not seen similar margin volatility driven by gold inflation. While peers also engage in gold hedging, such hedging costs were not observed.  Given the uncertainty around operating margins and slower SSSG than peers, MOFSL cut EPS estimates 25-30 per cent for FY25-27.

 

Meanwhile, the domestic demand for gold has taken a hit as the yellow metal traded at Rs 90,500-90,800 per 10 gm in Mumbai’s spot bullion market. The jewellery industry is toying with the question whether demand will return at these high prices as the marriage season has started, even as they are simultaneously preparing for changes in demand composition and considering tweaking products, the Business Standard reported. 

 

In its FY24 annual report, Senco Gold said the company consistently calibrated its hedging policies and practices to mitigate the impact of price volatility on profitability; efforts in ethical sourcing not only strengthened the brand but also ensured a reliable supply chain.  ALSO READ | Maruti Suzuki shares gain 2% on hiking vehicle price by 4%; check details

 

The company acknowledged several threats that could impact its operations. The highly competitive jewellery industry could lead to price wars, reduced margins and increased marketing expenses. Frequent regulatory changes, such as hallmarking mandates, import duties, and tax reforms, may pose compliance challenges and affect operational efficiency. 

 

Economic uncertainty, including inflation and currency volatility, could impact consumer spending and raw material costs, affecting profitability and sales. Global market dynamics, including changes in international trade policies and tariffs, pose further risks to export potential and profitability, the company said.