Senco Gold Ltd Q1 FY2027 Concall Summary

Key Takeaways

• Record quarter, uneven months: Q1 FY27 delivered record sales above ₹3,000 crores, but April carried the quarter at ₹1,500–1,600 crores while May and June moderated to ₹500–600 crores each on elections, Adhik Maas and heat wave.
• Growth guidance held, upside hinted: Management retained 20%+ value growth for FY27, implying revenue above ₹10,000 crores, and said the number could reach 25%+ depending on how the rest of the year averages out.
• Margin story is about normalisation: Q1 EBITDA margin of 7% compares against a Q1 FY26 figure inflated by inventory gains; management guides to a sustainable 7.5%–7.8% for the full year.
• Other expenses spiked but are quarter-specific: Other expenditure jumped from ~₹80 crores to ~₹195 crores on store renovations, customer schemes and brand-building; management says this run rate will not continue.
• What to watch next quarter: Whether July–August momentum of ~25% YoY growth holds into the festive build, whether other expenses actually normalise, and whether the 12–15 planned store openings stay on track.

Demand Environment

• April surge, May–June softness: April delivered ₹1,500–1,600 crores in sales on Poila Boishakh and Akshaya Tritiya demand, while May and June moderated to ₹500–600 crores per month as West Bengal elections, Adhik Maas and heat wave suppressed footfalls.
• Footfall offset by conversion: Challenges in footfalls were offset by innovative schemes and old gold exchange programmes that converted customers' old gold into diamond jewellery sales.
• Consumer shift to lightweight: At high gold prices, customers shifted toward lightweight, delicate, design-led jewellery for daily wear and gifting rather than simple or standard pieces; the company expanded its 9-carat and 14-carat assortment accordingly.
• Lower ticket sizes: Lower-ticket-size items were in greater demand; consumers remained inclined to buy jewellery but wanted products within their budgets.
• July–August recovery: After softer footfalls and sentiment toward end of May and June, management sees improvement in the market; July and August are up around 8%–10% compared with May–June levels, with current-quarter growth running about 25% YoY.

Sen: "Quarterly uncertainties are something we all have to deal with, but we intend to remain shareholder friendly."

Sales Performance & Mix

• Same-store growth: SSSG of almost 39% demonstrates strong relationships existing stores maintain with customers through engagement, innovative designs and new collections.
• Broad-based retail growth: 50% retail growth was broad-based across all zones, including the newly launched Central region (7 stores) and Delhi NCR, and strong across both owned and franchise stores.
• ASP and ATV: ASP increased almost 40% YoY and ATV increased 38% YoY, partly driven by average gold prices rising 61% YoY.
• Diamond jewellery momentum: Diamond jewellery sales increased 43% in value and 18% in volume, signalling design development, consumer preference shift and long-term margin impact as stud ratio increases.
• Old gold exchange: Old gold exchange accounted for almost 43% of total sales quantity, driven by the Prime Minister's appeal to reduce gold imports and industry-wide encouragement to exchange old gold.
• Grammage: Reduction is not a major concern; mixed-purity grammage increased, and 24-carat-equivalent basis was down only ~1%; jewellery retail is value-driven, not volume-driven, with making charges linked to value rather than per gram.

Margins & Costs

• Q1 margin context: Q1 FY26 benefited from a price rise; reported EBITDA margin was 10.1% but sustainable margin was 7.5%–7.8%. Q1 FY27's 7% EBITDA margin and ₹213 crores EBITDA is considered a good outcome.
• Margin decline drivers: 7% EBITDA margin was affected by fall in gold prices, competitive intensity and discounting, partly offset by customs-duty impact.
• Other expenses spike: Other expenditure rose from ~₹80 crores to ~₹195 crores on store renovations during lean season, customer offers and schemes, and brand-building; these were booked during the quarter to support the business and mitigate risks, and are not expected to recur at the same level every quarter.
• Marketing spend declined: Marketing cost declined 19% from ₹43 crores to ₹35 crores, even as other expenditure rose.
• Subsidiary drag on PAT: Consolidated PAT of ₹101 crores was lower than standalone partly due to three subsidiaries; the factory subsidiary is doing very well and enables launch of almost 100 designs per day, while Sennes brand and the Dubai entity remain in start-up phase and weighed on consolidated PAT.
• Cash flow optics: Cash flow from operations may appear negative from an accounting perspective due to lower GML borrowing this quarter; management describes this as accounting presentation rather than business reality, and will share details with H1 results.

Banka: "It is more an accounting presentation issue than a reflection of business reality. The business is generating sales, revenue has grown 67%, customers are coming in, and we are profitable."

Gold Sourcing, Hedging & Inventory

• GML constraint: During March and April, banks were not able to provide GML as freely; gold imports were constrained and there was uncertainty around duty changes, geopolitical situation and efforts to reduce gold imports. The company procured more gold from the local market and reduced GML exposure.
• GML normalisation: GML is now more easily available and the company will start building the portfolio again.
• Supply chain mix: Old-gold procurement was 43% blended (above 55% for own stores); ready-made/traded jewellery accounts for around 20%; balance sourced through GML or bullion vendors. The issue was primarily finance cost rather than physical availability.
• Inventory optimisation: Based on store-by-store performance, the company reduced inventory in both kilogram and value terms, improving inventory days to around 152; stock-turnover ratio improved substantially by quarter-end.
• Inventory build strategy: Built inventory ahead of Poila Boishakh and Akshaya Tritiya, enabling strong April sales; as demand moderated, focused on selling through built inventory. Will begin building inventory again from September onward, then reduce during festive period.
• Hedging policy: Intend to maintain hedging at approximately 50% until gold prices stabilise; can gradually increase hedge ratio as conditions become more stable. In practice may move closer to 75%–80% while keeping ~20% buffer for flexibility.

Sen: "A 100% hedge is an idealised level. In practice, we may move closer to 75%-80% while keeping a buffer of around 20% for flexibility. In the long run, however, we would like to hedge as much of the exposure as is practical."

Store Network & Product Launches

• Network additions: Added 3 company-owned, company-operated stores, 4 franchise stores and 1 Sennes showroom focused on lab-grown diamonds during Q1.
• Aham men's jewellery launch: Launched a new men's jewellery collection under Aham, combining titanium with gold and diamonds; among the first in the industry to launch titanium jewellery; range starts at about ₹20,000 and goes up to ₹1 lakh.
• Brand ambassadors: Engaged brand ambassadors for the men's jewellery brand to build traction and attract younger customers.
• Design pipeline: Will continue to introduce new designs throughout the year; more than 150,000 designs every year.
• Technology adoption: Implemented gold-rate-based software to evaluate store performance, and AI-based software to analyse inventory productivity by jewellery category, range, design, metal and customer base.

Guidance & Commitments

Key Metrics