Senco Gold Ltd experienced a sharp 20% decline in its share price during early trading on Friday, hitting a nine-month low of ₹357.60. This drastic drop followed the release of its Q3FY25 financial results, which revealed a steep 70% decline in consolidated net profit, falling from ₹109 crore in the corresponding quarter last year to ₹33 crore. The primary reason behind this significant slump in net profit was the impact of a one-time customs duty reduction, which affected margins and overall earnings for the quarter.
Despite the decline in profitability, the jewellery retailer reported a strong 27% year-on-year growth in revenue from operations, reaching ₹2,103 crore—the highest-ever quarterly revenue for the company. Managing Director and CEO Suvankar Sen acknowledged the high volatility in gold prices during Q3, with a notable 22% year-on-year increase and a 20% surge since April 2024. However, he emphasized that consumer demand for gold remained resilient, particularly during the festive season of Dhanteras and Diwali. The customs duty reduction implemented in the previous quarter acted as a temporary catalyst, bolstering sales for Q3 despite the overall impact on margins.
On the operational front, EBITDA declined to ₹79.9 crore, reflecting the pressure on earnings. The adjusted EBITDA for the nine-month period stood at ₹298 crore, with an adjusted EBITDA margin of 6%. Additionally, the adjusted profit after tax (PAT) for Q3 was reported at ₹53.8 crore, further indicating the strain on profitability during the period.
The company attributed the decline in margins to multiple factors, including the rising impact of lab-grown diamonds, which affected the stud ratio and, in turn, weighed on diamond jewellery margins. Additionally, a higher share of export sales—typically characterized by lower profit margins than domestic sales—further contributed to the downward pressure on earnings.
CFO Sanjay Banka reassured investors and stakeholders by expressing confidence in the long-term growth trajectory of India’s gems and jewellery industry, which is currently valued at approximately $85-$90 billion. He stated that Senco Gold remains committed to achieving 7-8% EBITDA margins on an annualized basis, barring the impact of exceptional events such as the customs duty reduction. He further emphasized that the lower EBITDA and PAT margins observed in Q3 were a temporary phase, while the adjusted nine-month EBITDA margin remained steady at 6.0%.
Looking ahead, Senco Gold has laid out a strategic roadmap to restore profitability and improve margins in Q4 and beyond. The company aims to leverage its strong brand positioning, operational efficiencies, and premium pricing strategies to drive growth. As one of the most trusted jewellery brands in India, Senco Gold is focused on expanding its product portfolio, introducing innovative offerings, and targeting premium consumers to enhance sales.
Currently, the company operates 171 showrooms across India, including 70 franchise outlets. Over the past nine months, it has expanded its footprint by opening 12 new showrooms and plans to launch an additional 8-10 outlets in Q4. In a bid to further diversify its business and tap into new market segments, Senco Gold is also making a strategic foray into the consumer lifestyle segment through its newly established subsidiary, Sennes Fashion Limited. This new venture will focus on premium leather accessories, lab-grown diamond jewellery, and perfumes, positioning the brand as a key player beyond the traditional jewellery domain.
With a strong retail presence, a growing product portfolio, and an eye on future expansion, Senco Gold remains optimistic about sustaining long-term growth. The company is focused on capitalizing on India’s increasing demand for gold and diamond jewellery while simultaneously mitigating external challenges such as customs duty fluctuations and changing consumer preferences in the jewellery market.
