Despite a 67% year-on-year jump in revenue driven by festive demand, Senco Gold’s margins have weakened sharply, prompting caution from Motilal Oswal with a neutral outlook and a target price of Rs 385.
Motilal Oswal Financial Services has stayed cautious on Senco Gold despite a sharp jump in first-quarter revenue, keeping a Neutral stance and a target price of Rs 385. The brokerage said the jewellery retailer’s topline rose 67% year on year to Rs 3,100 crore in the quarter to June 2026, helped by festive and wedding demand, but warned that the earnings picture was far less convincing because margins weakened sharply. It said the stock still offers only limited upside from the current price of Rs 346.
The quarter was marked by unusually strong demand across key categories. Motilal Oswal said same-store sales growth reached 39%, supported by Akshaya Tritiya, Poila Boishakh, Baisakhi and the summer wedding season. Gold jewellery volumes were broadly steady even as average gold prices climbed about 61% from a year earlier, while retail sales rose 50% and diamond jewellery sales gained 43%. Management has said momentum has continued into July and August, with sales running about 25% higher year on year, and it is still guiding for roughly 20% revenue growth for the full year.
Profitability, however, remained the weak point. Motilal Oswal said gross margin slipped to 15.7% from 19.9% a year earlier, hit by gold price swings, heavy discounting and a larger share of old-gold exchange transactions. The brokerage also pointed to higher employee costs and a steep rise in other expenses, including marketing and store refurbishments. Adjusted profit after tax rose only 2% despite the surge in sales, reinforcing the view that Senco’s earnings remain vulnerable to commodity volatility and a relatively modest hedge ratio.
The company continued to expand its store network, opening eight outlets in the quarter to take the total to 209, and it plans further franchise-led growth in smaller cities. Earlier research from Motilal Oswal showed the business had already been leaning on old-gold exchange and festive demand to drive growth, but also noted that gold volumes fell in FY26 as prices rose. The latest report suggests that Senco’s growth story is intact, yet the brokerage still wants clearer evidence that margins can be steadied before turning more positive on the stock.
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