Brokerage firm Emkay Global has set the target price of jewellery stock Senco Gold while retaining ‘buy’ rating to ₹600 despite company reported weak Q3 results. The brokerage firm sees an upside potential up to 85 per cent in the jewellery stock.
“We also reduce our TP multiple by ~10% on lower profitability/ROCE in the business; this leads to a ~23% cut to our TP. However, we see the ~50% correction in Senco (vs 52-week high) as unwarranted, and an assuring explanation for the margin volatility should be the key catalyst for a re-rating,” the brokerage firm said in a note.
Senco Gold’s stock has declined by 60 per cent from its all-time high of ₹772 in October 2024 to ₹304 in February 2025.
The jewellery industry is facing challenges due to the unprecedented surge in gold prices, affecting both customer demand and jewellers’ profitability.
Senco Gold Q3 FY25 results highlights
Senco Gold’s profit after tax (PAT) saw a sharp decline of 69.3 per cent year-on-year (YoY), falling to ₹33.48 crore in Q3FY25 from ₹109.32 crore in Q3FY24. Similarly, the adjusted PAT dropped by 50.9 per cent year-on-year to ₹53.74 crore from ₹109.32 crore.
Despite the decline in profits, the company recorded a strong 27.3% growth in operational revenue, reaching ₹2,102.55 crore in Q3FY25, up from ₹1,652.20 crore in the same quarter last year.
Meanwhile, EBITDA dropped 55.8 per cent year-on-year to ₹79.96 crore from ₹181.1 crore in Q3FY24. Adjusted EBITDA also saw a significant decline, decreasing by 40.4 per cent to ₹107.55 crore compared to ₹181.1 crore in the previous year. As a result, the EBITDA margin shrank sharply to 3.8 per cent in Q3FY25 from 11.0 per cent in Q3FY24.
“Senco’s reported Q3 EBITDA missed our estimate by ~500bps. However, most of the miss was led by hedging loss in the current quarter and hedging gain in the base quarter, as adjusted gross-margin (GM) decline was limited to only 100bps (Exhibit 1). Q3 revenue growth at 22% (14% SSG) was healthy/in-line. While the sizable GM volatility is underwhelming, Senco attributes the hedging impact to the highly volatile gold-price environment. Overall, growth outlook of ~20% and 18-20 annual adds was retained; the adj GM decline is due to higher mix of low-margin franchisee/exports and lower studded mix, which the management is hopeful of gradually recouping hereon,” brokerage firm Emkay Global further added.
