SENCO Gold Share Price Target at Rs 411: BOB Capital Markets
BOB Capital Markets (BOBCAPS) has upgraded Senco Gold to a BUY with a revised target price of Rs 411, implying an upside of nearly 17% from current levels. The upgrade follows a blowout Q3FY26 performance marked by 50% revenue growth, sharp operating leverage, and a near fourfold expansion in EBITDA. Management has guided for sustained double-digit growth, calibrated store expansion, and margin normalization over the medium term. Despite elevated gold prices, demand remains resilient, supported by higher old-gold exchanges and improved ticket sizes. Earnings visibility has strengthened materially, prompting a valuation re-rating at 20x Dec’27E earnings.
Rating Upgrade Anchored in Earnings Acceleration
BOBCAPS has upgraded Senco Gold from HOLD to BUY and raised its target price by 11% to Rs 411, valuing the stock at 20x Dec’27E earnings. The research house cites improved demand visibility, operating leverage, and disciplined cost management as catalysts for the rating change.
At the current market price of approximately Rs 352, the stock trades at 12.2x FY26E earnings and 20.2x FY27E earnings, offering an attractive entry point relative to its historical average P/E of 26.4x since IPO.
Q3FY26: Revenue Surges 50%, Margins Expand Sharply
Senco delivered a standout Q3FY26 performance:
| Metric | Q3FY26 | YoY Growth |
|---|---|---|
| Total Revenue | Rs 30,710 mn | 50.1% |
| EBITDA | Rs 4,046 mn | 406% |
| EBITDA Margin | 13.2% | +927 bps |
| Adjusted PAT | Rs 2,640 mn | 688% |
The revenue beat expectations by 22%, while EBITDA exceeded estimates by 100%. Sequentially, revenue and EBITDA nearly doubled from Q2FY26, reflecting strong festive demand and execution momentum.
Demand Resilient Despite Record Gold Prices
Gold prices hovered at record levels of Rs 1.4–1.5 lakh per 10 grams during the quarter. Yet, management emphasized that demand remained intact.
Key demand drivers:
Old gold exchange contributed 45–50% of sales (vs 25–30% historically).
Average ticket size improved to approximately Rs 90,000.
Diamond jewellery recorded 38% value growth.
Stud ratio remained stable at 11–12%.
While footfalls declined 10–15% YoY, higher realizations and favorable product mix offset volume softness. Lightweight jewellery and 14K/18K segments gained traction.
Store Economics: Owned Stores Power Margin Expansion
The company’s channel mix continues to tilt toward higher-margin owned stores:
65% revenue from company-owned stores (COCO)
33% from franchise
2% from other channels
Owned stores deliver gross margins of 18–20% versus 7–8% for franchise operations. This structural advantage drove gross margin expansion to 19.9% in Q3FY26 from 10.2% a year earlier.
Senco added four net stores in Q3, taking the total to 196, and plans to cross 200 stores shortly.
Guidance Signals Sustained Growth Trajectory
Management’s forward commentary remains constructive:
Q4FY26 revenue growth: 25–30% YoY
FY27 revenue growth: 20%+
Sustainable EBITDA margin: 7.5–7.8%
Planned store additions: 18–20 in FY27 (8–10 franchise)
Non-East markets are expanding at 25–30%, outpacing East-region growth of 18–20%. Approximately 156 stores are classified as mature, providing stable operating leverage.
Revised Estimates Reflect Improved Visibility
BOBCAPS has revised its financial projections upward:
| Metric | FY26E | FY27E | FY28E |
|---|---|---|---|
| Revenue (Rs bn) | 81.1 | 91.2 | 102.2 |
| EBITDA (Rs bn) | 7.9 | 5.5 | 7.0 |
| EPS (Rs) | 28.8 | 17.4 | 24.0 |
Revenue estimates for FY27E and FY28E have been raised by 3.4% and 2.3%, respectively. EBITDA adjustments factor in margin normalization post FY26’s peak.
Over FY25–FY28E:
EPS CAGR projected at 35.2%
Revenue CAGR estimated at 12.3%
ROCE expected to remain above 12%
Balance Sheet and Capital Efficiency
Net debt-to-EBITDA is projected at 2.3x in FY26E before rising modestly in FY27E due to expansion investments.
Inventory days stand at approximately 200, reflecting gold retailing dynamics. Borrowing costs are expected to decline by 30–40 bps following a credit rating upgrade.
Hedging levels were maintained at 55–60%, below historical 80–90% levels, with a minimum 50% hedge policy intact.
Strategic Lever: Melorra Acquisition
The board-approved acquisition of Melorra aims to strengthen Senco’s positioning among Gen-Z and millennial consumers. This design-led, digital-first brand complements Senco’s legacy footprint and enhances customer cohort diversification.
Key Risks to Monitor
Downside risks:
Rising competitive intensity in West Bengal
Heightened gold price volatility
Regulatory headwinds
Upside triggers:
Faster store additions and ramp-up
Higher franchise revenue contribution
Sustained traction in diamond and lightweight categories
Valuation Verdict: Attractive Risk-Reward
Senco currently trades at a discount to its historical valuation band. At 20x Dec’27E EPS, BOBCAPS arrives at a fair value of Rs 411.
Given:
Improved earnings visibility
Strong operating leverage
Calibrated expansion strategy
Structurally superior owned-store mix
The risk-reward appears favorable for medium-term investors.
In a gold retail landscape challenged by volatility yet supported by cultural demand resilience, Senco’s execution discipline and margin architecture position it for sustained value creation.
