Senco Gold posts its strongest revenue growth in years, but profits slip due to mounting costs, gold price swings, and margin erosion, highlighting the complex outlook for India’s jewellery sector.
Senco Gold’s latest quarter showed a familiar market paradox: sales surged, but profits did not keep pace. According to the company’s business update and subsequent market reports, the jewellery retailer posted its strongest first-quarter revenue growth in years, yet investors marked down the stock after consolidated profit slipped from a year earlier and margins came under pressure.
The company reported consolidated revenue from operations of ₹3,056 crore for the quarter, up 67% from ₹1,826.3 crore a year earlier. Retail sales rose 50% to ₹2,651.5 crore, while same-store sales growth reached 39%, reflecting strong demand during the festive period and the wedding season. Senco also added eight showrooms, taking its total network to 209 outlets, according to the company’s update and coverage in The Economic Times, LiveMint and Business Standard.
Even so, profitability weakened. Consolidated net profit fell 3% year on year to ₹101.1 crore, while EBITDA rose only 16% to ₹213.1 crore as the margin slipped to 7% from 10% a year earlier. Trade Brains said gross margin declined to 16% from 19%, with management pointing to discounting, gold price swings and higher customs duty as key drags.
Rising gold prices added to the strain. Average gold prices were about 61% higher than a year earlier, while the quarter-end rate was still sharply above last year’s level. The company said its old-gold exchange programme, which carries no deduction, supported 43% of sales volume, helping customers cope with higher prices but also weighing on margins. Finance costs climbed 58% to ₹67.9 crore, which the company linked to gold volatility and costlier borrowing.
There was, however, one clear improvement: inventory discipline. Trade Brains reported that Senco reduced inventory by about ₹300 crore, easing working-capital pressure. That matters in a business where stock is tied closely to gold prices and financing costs. The quarter also showed continued traction in diamond jewellery and helped lift trailing 12-month sales to ₹9,660 crore.
Management remains optimistic about the next phase. Suvankar Sen, Senco Gold’s managing director and chief executive, has said the company expects revenue growth of 20% to 25% in FY27 and a normalisation of PAT margin to 4% to 4.5%. The company is also targeting 12 to 15 more store openings this year, with future expansion expected to lean more heavily on franchising. Motilal Oswal has kept a neutral view on the stock with a ₹375 target, underscoring the tension between strong demand and weaker near-term earnings quality.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
