Senko Gold Ltd., incorporated in the year 1994, is a Small Cap company (having a market cap of Rs. 8639.15 Crore) operating in the Gems & Jewelery sector.
Senko Gold Limited. Key Products/Revenue Segments include for the year ended
Investment rationale
Senko beat our Q1 EBITDA/PAT estimates big led by better gross margins (by ~500bps YoY). A sudden spike in gold prices and operating challenges led to modest retail revenue growth of 11% in Q1, in line with the muted trends seen in TTAN. However, a sharp 900bps duty cut on gold and a return to operating normalcy led to a strong recovery with FY25TD retail growth picking up to ~20%.
Senko has maintained its FY25 growth outlook of 18-20%. EBITDA margin beat of ~250bps was led by better franchise terms, lower discounting/better gold premium and lower margin base as hedging remained at ~95% in Q1. While the duty cut significantly improves the medium-term prospects, Senko will face Rs. A short-term hedging loss of 0.5 billion is expected, which will be spread over the next 2-3 quarters.
The margin beat is a ~12% upside revision to our earnings estimates. Despite similar or better operating performance, Senko is trading at a significant discount to peers. We increase our TP multiple by 5% and revise TP to Rs1,400/sh (based on 32x Sep-25E EPS).
Financial
For the quarter ended 30-06-2024, the company reported Rs. 1416.18 crore reported a consolidated total revenue of Rs. 1150.12 crores 23.13% higher than the same quarter last year total revenue of Rs. . The company reported a net profit after tax of Rs 51.27 crore in the latest quarter.
Promoter/FII Holdings
Promoters held 68.45 per cent stake in the company as on 30-Jun-2024, while FIIs held 7.72 per cent, DIIs 10.46 per cent.
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