Senco Gold shares fall 8% on margin contraction despite revenue growth
Senco Gold saw its shares fall more than 8 per cent after a sharp contraction in profit margins overshadowed a 67 per cent surge in quarterly revenue, highlighting the pricing pressures facing India's jewellery retailers.
Shares in Indian jewellery retailer Senco Gold dropped more than 8 per cent following its first-quarter earnings report. The sell-off came after the company posted a 3 per cent year-on-year decline in consolidated profit after tax to Rs 101 crore, despite consolidated revenue jumping 67 per cent to Rs 3,056 crore.
The results underscore the margin pressures hitting the sector, as aggressive promotional discounting, fluctuating gold prices and customs duty changes eroded profitability. Earnings before interest, taxes, depreciation, and amortization rose 16 per cent to Rs 213 crore, but the underlying margin contracted 310 basis points to 7 per cent.
Top-line expansion was driven by a 50 per cent increase in retail sales to Rs 2,651.5 crore. Same-store sales grew 39 per cent, supported by early-quarter festive and wedding events such as Akshaya Tritiya and Poila Boishakh.
High gold prices pushed consumers toward exchanging old jewellery, which accounted for 43 per cent of total sales quantity. Management also moved to optimize efficiency by reducing quarterly inventory by Rs 300 crore, according to group chief financial officer Sanjay Banka.
Managing director and chief executive Suvankar Sen noted the strong start to the fiscal year. "We are pleased to begin FY27 with a strong Q1 performance, building on the momentum achieved in FY26," Sen said, citing broad-based demand during the summer wedding season.
Looking ahead, the company expects a seasonally softer second quarter but targets improved profitability. Banka stated the firm remains committed to its guidance, noting, "We remain committed to FY27 value growth of 20%+ and EBITDA margin of 7.5%-7.8%, while working towards a sustainable PAT margin of 4%-4.5% with a sharp focus on Return on Capital Employed."
Senco Gold added eight net new showrooms during the quarter, bringing its total network to 209 locations. The retailer plans to open another 12 to 15 stores in the remainder of the fiscal year, focusing on smaller cities and franchise partnerships.
