Senco Gold shares slide 18% on sharp margin fall, weak Q3 earnings- Grow Mudra

Senco Gold shares slide 18% on sharp margin fall, weak Q3 earnings

14 Feb , 2025 By : Debdeep Gupta

Shares of Senco Gold tanked 18 percent in opening trade on February 14, bogged down by the sharp margin decline reported by the company in Q3.

Bearing the brunt of higher costs associated with starting up new subsidiaries, Senco Gold's EBITDA margin plunged to 3.8 percent in Q3, a sharp contraction when compared to the 11 percent it reported in the year-ago period.

According to the management, the margin variance when compared to the same quarter last fiscal is largely driven by the impact of customs duty in the last two quarters and overall gold price volatility. The company had previously guided for its EBITDA margins to be in the range of 7-8 percent.

The sluggish operational performance also weighed down on Senco Gold's bottom line, as net profit slumped to Rs 33.5 crore, as against Rs 101.3 crore in the same quarter last fiscal.

At 09.28 am, shares of Senco Gold were trading at Rs 369.30 on the NSE.

However, the company's topline stood strong with revenue coming in at a record high of Rs 2,100 crore, up 27 percent on year.

Gold prices saw high volatility in Q3, surging 22 percent on year and 20 percent since April 2024. Despite this, consumer demand remained strong, with the reduction in customs duties during Q2 acting as a tailwind for Q3 sales, particularly during Dhanteras and Diwali, the management stated.

"This quarter was a milestone for us, as we achieved our highest-ever Q3 revenue of Rs 2,000 crore and a record single-month revenue of Rs 1,000 crore during the Dhanteras month, reflecting a solid 22 percent on-year growth," said Suvankar Sen, Managing Director & CEO of Senco Gold, in an exchange filing.

Looking ahead, Sanjay Banka, CFO of Senco Gold, expressed confidence in achieving a 7-8 percent EBITDA margin on an annualized basis, excluding any one-off events, driven by the long-term growth prospects of the Indian gems and jewelry industry.

"We are likely to achieve a 7-8 percent EBITDA margin in Q4 and beyond, supported by our strong brand positioning and operating leverage. Additionally, we aim to further boost sales through innovative offerings and premium pricing," Banka added.