Senco Gold Aug-24

• Senco Gold Limited hosted its Q1 FY25 Results Conference Call on August 14, 2024.
• Emkay Global Financial Services hosted the call.
• Suvankar Sen, Managing Director and CEO, and Sanjay Banka, CFO, represented Senco Gold.
• Vishal Panjwani from Emkay Global Financial moderated.

Q1 FY25 Performance

• Akshaya Tritiya sales increased almost 20% to 21% in sales value.
• Consolidated sales value increased by 7.5%.
• Retail sales grew by 11%, with same store sales growth at about 4%.
• Six stores were added, four company-owned and two franchisee.
• One store opened in Dubai.
• ATV grew by almost 12%, and ASP grew by 13%.
• Hedging was above 90%.

Diamond Sales

• Diamond sales de-grew by about 3% to 4%.
• Consumers postponed purchases due to rising prices.

Duty Cut Impact

• Reduction of duty by almost 9% is a big boost to the industry.
• Approximately 50 crores of financial impact is expected due to the duty.
• Increase in sales and footfalls are expected to offset the impact.
• Impact of 50 crores INR spread over the coming 2nd to 3rd quarters.
• Cost-cutting measures and rationalized discounting are being implemented.

Inventory and Hedging

• International price movements are hedged by gold loans.
• Duty cut movements for gold taken on loan from banks are not hedged.
• About 95% of gold metal loan remains unfixed and is hedged.

Gross Margin and EBITDA

• Improvement in the quality of business has been observed.
• Long-term sustainable business is based upon value proposition.
• Hedging percentage has been ~95%.
• The company is committed to risk management strategy.

Sales Trends

• Growth was 21% during the Akshaya Tritiya.
• After 41 days, elections were also at the peak and then the market had taken a dip.
• SSSG during that period was certainly more than 10% to 12%. As you said that when the growth is 20%, SSSG is usually 60% to 70% of total growth.

Studded Ratio

• The studded ratio in Q1 decreased to around 9.6%~9.7%.
• The studded ratio was about 11.5% last year on average.
• The company aims to increase studded ratio by at least 100 basis points.
• The target is to achieve 12.5% to 13% this year, but surely touch 12%.

Wedding Contribution

• The wedding jewelry share is around 40% ~ 45%.

Gold Metal Loan

• Hedged against the rupee-dollar movement which means it does not take the duty cut or duty increase into account

Future Outlook

• Demand has increased over the last 15 days.
• The company is growing at 18% to 20%.
• Higher growth is happening in the franchisee stores over the last year.
• Tier three and tier four town demand is coming back.
• Agriculture sector, good monsoon, stabilization of the economy post elections, faith in the government policy, a pro-farmer policy,

Lab Grown Diamonds

• Consumers are more accepting of lab-grown diamonds.
• Small role to play in the fashion segment.
• Curiosity and increased curiosity and more acceptance in the industry related to lab-grown diamonds.

Store Expansion

• One store was opened in Dubai.
• Initial stages of increasing the global presence.
• Taking a methodical and calibrated expansion doing expansion abroad.

Financial Targets

• SSSG stores is the source of 13-14% of the growth.
• Targeted SSSG is to be around between 13%to 14%.

Old Gold Exchange

• Has significantly increased in the previous quarters
• Mostly made up of none Senco gold.
• Is a good way to raise capital.
• Is considered a green currency for company
• The objective of the marketing is to increase the amount of footfall.
• Can save foreign exchange.

Q3 Forecast

• Should be lower than the 18-20% range with 15-18% expected

Gold Exchange

• The trust and movement from unorganized to organized in the respective market.
• So in our market also, as we are market leader, this consistent increase, as
• The increase in marketing and good consumer brand will increase rate up too 40-45%