Senco Gold, a prominent player in the jewelry industry, experienced a substantial uptick of nearly 10% in its stock value following a robust business update for the fourth quarter, inching closer to its 52-week pinnacle.
Despite the escalating prices of gold, Senco Gold showcased remarkable resilience, achieving a noteworthy 13% increase in gold volume and an impressive 19% surge in diamond volume during the fiscal year 2024.
On April 15, the company’s shares soared by over 4% subsequent to the release of its business update, which revealed a remarkable 28% surge in revenue for the fiscal year 2024, accompanied by a substantial 39% year-on-year growth for the quarter ending March 2024.
Notably, despite the challenges posed by the rising prices of gold, the company managed to sustain its growth trajectory, registering a significant 13% rise in gold volume and an impressive 19% increase in diamond volume for the entire fiscal period. Senco Gold attributed this resilience to the organized nature of listed jewelers, contrasting the challenges faced by unorganized counterparts.
The surge in gold prices has resulted in a constricted availability of working capital, primarily due to elevated margins for Gold Hedging and Gold Metal Loan (GML), as stated by Senco Gold.
According to the business update, the proportion of old gold exchange to Senco Gold’s sales surged to 32% from 29% in the previous year, while its same-store-sales growth (SSSG) for the full year stood at an impressive 19%.
Commenting on the recent market dynamics, Senco Gold noted that the sharp escalation in gold prices, fueled by geopolitical tensions in the Middle East, has dampened demand. The company emphasized that the industry’s performance in the first quarter is contingent upon sustained buying behavior during festive and auspicious occasions.
In response to the evolving market conditions, the Kolkata-based company disclosed a series of strategic initiatives aimed at addressing the demand slowdown, including a concerted push towards diamond-studded gold jewelry and consumer-centric schemes. However, these measures might not entirely offset the 15-20% decline in volume witnessed during March and April.
In a significant development, Senco Gold expanded its retail footprint by launching 23 showrooms on a net basis in FY24, including four showrooms in the January-March quarter alone, bringing its total showroom count to 159, marking the highest-ever expansion since its inception.
Senco Gold, which made its debut in the stock market last year through an Initial Public Offering (IPO) in July 2023 at an issue price of Rs 317, witnessed a strong premium of over 35% upon listing on both BSE and NSE, trading at Rs 430 on NSE.
Since its listing, the company’s stock price has more than doubled, with Senco Gold shares trading at Rs 880.00 as of 9:37 am, marking an impressive surge of nearly 10% from the previous close.