Senco Gold Q1 Results Review - Better Margin Delivery In Tough Quarter: Motilal Oswal

Motilal Oswal Report

Senco Gold Ltd. consolidated revenue grew 8% YoY to Rs 14,039 million (estimate Rs 15,469 million) in Q1 FY25. Same store sales growth decelerated to 4% (versus 23% in Q4 FY24, 19% in FY24), impacted by heatwaves, general elections, fewer wedding days and gold inflation.

The management noted that demand has bounced back after the reduction in customs duty. Demand for both wedding and nonwedding jewelry saw a spike. The share of studded jewelry was lower at 10% compared to 11% in Q1 FY24. Studded revenue declined ~3% YoY.

Gross margin expanded by 480 basis points YoY and 20 bp QoQ to 17.3%, due to better performance from franchised stores, lower discounting and higher sales of high-end jewelry.

Ebitda margin improved to 7.7% versus 5.1% in Q1 FY24. The reduction in customs duty is expected to impact inventory valuation by Rs 500 million and, consequently, affect gross margin and Ebitda over the next two to three quarters.

The management has lowered its profitability guidance to 15-18% from the previous range of 18-20%.

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