Buy Senco Gold; target of Rs 1100: Emkay Global Financial

Emkay Global Financial's research report on Senco Gold

The Senco stock reacted positively (+18% intra-day) on the back of a significant beat to our estimates and its SSG outperformance vs. listed jewelry peers in Q4/FY24. Senco delivered 30% retail growth in Q4 (vs. our expectation of 21%), helped by a robust 23%/19% SSG in Q4/FY24. For full-FY24, Senco has delivered 28% topline growth compared with ~20%/34% for TTAN/Kalyan. Network expansion has also been solid and in line with our expectations of 21 jewelry stores (16 COCO/5 FOFO) in FY24. Even after the strong run-up, valuations are at a significant discount to listed jewelry peers (Exhibit 6), despite its resilient growth execution historically (16%/20% revenue/PAT CAGR over FY15-24E) and similar medium-term growth prospects. An increasing studded mix should add to our estimate of ~20% topline growth and help deliver 23/27% EBITDA/PAT CAGR over FY24-26E.

Outlook

We raise our TP by 19% to Rs 1,100/share, on the back of the 2-3% EPS change and ~15% increase in our TP multiple to 29x FY26E EPS. Continued execution and traction in non-East geographies offer an added re-rating upside.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Senco Gold - 16042024 - emkay