Company and IPO Overview:
Senco Gold Limited is a pan-India jewellery retailer which was incorporated in 1994 in West Bengal, India by Suvankar Sen, Jai Hanuman Shri Siddhivinayak Trust and Om Gaan Ganapataye Bajrangbali Trust. Later, in order to expand its activities in the field of the jewellery business, the Company was converted to a public limited company in August 2007 with the name Senco Gold Limited. Senco Gold is a pan-India jewellery retail player with a history of more than five decades and has a fourth generation entrepreneur in the jewellery industry as its Promoter.
It is the largest organized jewellery retail player in the eastern part of India in terms of store count, and it has the largest geographical footprint in non-eastern states among eastern India-based jewels retailers. It mostly sells gold and diamond jewellery, but it also sells silver, platinum, precious and semi-precious stones, and other metals. Its other products include costume jewellery, gold and silver coins, and silver kitchenware. In these categories, it offers jewellery like
1. Wedding Jewellery
2. Festival Jewellery
3. Daily wear Jewellery
4. Men’s Jewellery
5. Kids Jewellery
Senco Gold Limited offers a wide range of handcrafted jewellery designs, the majority of which are designed and manufactured in-house in close collaboration with more than 170 skilled local craftsmen (generally referred to as Karigars) in Kolkata and throughout the country. The company's catalogue includes more than 69,000 diamond jewellery designs and 120,000 designs for gold jewellery.
Through its Everlite (lightweight jewellery), Gossip (silver and fashion jewellery) brands, and Aham collection (jewellery for men) jewellery collections the company aims to cater to the younger generation and the 'upwardly mobile' of India by building brands focused on jewellery of smaller average ticket size. The company's D'Signia Showrooms and Vivaha collection aim to cater to customers seeking heavier or premium designer jewellery or a more premium jewellery retail shopping experience.
Their standard showrooms have an Average Ticket Size of ₹ 48,000.00, D'Signia Showrooms have an Average Ticket Size of ₹ 51,000.00 and Everlite Showrooms have an Average Ticket Size of ₹ 29,000.00, each for the Fiscal 2023.
Senco Gold IPO is going to raise around ₹ 405 crores; that comprises fresh issue of ₹ 270 crores and Offer For Sale (OFS) up to ₹135 crores. The retail quota is 35%, QIB is 50%, and HNI is 15%. The price band of the issue is ₹ 301 to ₹ 317 with a minimum market lot of 47 shares.
Financials (rounded off):
Date | Total Revenue (₹ in cr) | PAT (₹ in cr) |
31/03/2021 | 2675 | 61 |
31/03/2022 | 3547 | 129 |
31/03/2023 | 4109 | 158 |
Objectives of the Issue:
1. Funding working capital requirements of the company, and
2. General corporate purposes.
IPO Details:
IPO Date | 04/07/2023-06/07/2023 |
Face Value | ₹10 per share |
IPO Price Band | ₹301-₹317 per share |
IPO Lot Size | 47 Shares |
Listing at | NSE, BSE |
Basis of Allotment | 11/07/2023 |
Credit of Shares in Demat | 13/07/2023 |
Listing Date | 14/07/2023 |
Pre-Issue Shareholding | 76.92% |
Post-Issue Shareholding | 68.48% |
Retail Minimum Lot Size | 47 shares (₹14,899) |
Valuations & Margins:
Indicators | FY 21 | FY 22 | FY 23 |
EPS | 9.25 | 19.37 | 22.87 |
P/E | - | - | 15.53 |
EBITDA (%) | 7.10 | 8.17 | 8.46 |
Debt/Equity | 0.89 | 1.19 | 1.25 |
ROCE (%) | 13.22 | 15.58 | 14.22 |
Important things to note about the Company:
Top reasons to consider the IPO:
1. The revenue CAGR of the company increased at a CAGR of 15.36% and the profit for the year has increased at a CAGR of 22.75%from Fiscal 2022 to Fiscal 2023.
2. The company has been doing BIS Hallmarking to all its gold jewellery since 2012, much prior to the mandatory use of BIS Hallmark which started in 2021. The act of the company to ensure transparency in its operations has increased the trust in the company which is a major strength of the company.
3. Senco Gold Limited has an experienced management team and institutional investor support which is a key contributor to the sustainable growth of the company.
4. The company offers a wide variety ranging from festive collections to daily wear. This optimal product mix helps in increasing the overall profit margins of the company.
Risk factors to watch out in the IPO:
1. The company operates in a highly competitive market where there are several gold and jewellery companies that are well established, for example, Tanishq by TATA, Malabar Gold, etc. If these companies offer products at competitive prices, it would be a sign of threat to the company.
2. The company was subjected to a “search and seizure” operation by the Income tax department in the past, which has resulted in taxation and criminal proceedings being initiated against our Company and our Individual Promoter. Any adverse outcome of such proceedings might have a negative impact on the business.
3. Negative cash flows from operating and investing activities have been experienced in previous fiscal years, and there is no guarantee that the company will not encounter negative cash flows in the future.
4. Lastly, we know the prices of gold and diamond are volatile and dependent on many national and international factors, this might affect the revenue and profitability of the company.
Crisp Insights:
Current Grey Market Premium is 125.
Business looks well positioned to capitalize on the growing demand of jewellery and luxury goods in the country.
Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.
Good insights must apply 🤑