Senco Gold shares jump 8% to hit new highs amid fundraising, stock split buzz

Shares of Senco Gold Ltd surged during the trading session on Tuesday after the company announced its board meeting at its Kolkata-based registered office to be held on Friday, October 4, 2024 to consider proposals for fundraising and stock split.

The company board is slated to meet to consider and approve the proposal of raising funds by issuance of equity shares, by way of preferential issue, private placement or qualified institutional placement or any other permissible method as the board may deem appropriate, said the company in the exchange filing.

"The company board may also consider and approved the proposal for alteration in the share capital of the Company by way of sub-division/ split of the existing equity shares of the face value Rs 10 each in such manner as may be determined by the board of directors subject to approval of the shareholders and any regulatory/statutory approvals," it added.

Following the announcement of board meeting by the jewellery player, shares of Senco Gold surged 7.85 per cent to Rs 1,542.95 on Tuesday, hitting its new all-time highs and commanding a total market capitalization close to Rs 12,000 crore. The scrip had settled at Rs 1,430.65 in the previous trading session on Monday.

In its recent report, Emkay Global said that it sees significant re-rating scope for Senco, helped by our expectations of a strong pick-up/SSG outperformance in Q2 and valuation discount against PN Gadgil after its 70 per cent listing gain. Its checks suggest a strong pick-up in jewelry retail after a modest Q1, as intermediate cooling of gold prices rushed consumers to stores, said Emkay.

Senco is now comfortably placed to meet or exceed its 18-20 per cent annual growth guidance. Senco is trading at a 45-55 per cent discount to Titan/Kalyan. Given the strong execution and relatively longer listing history, we believe the steep discount is unwarranted. We increase our multiple by 15 per cent to 36 times EPS, and reiterate 'buy' rating with a target price of Rs 1,600," it added.

Shares of Senco Gold have surged about 170 per cent from its 52-week low at Rs 576.50, hit on October 26, 2023. Even from the IPO price of Rs 317 apiece, the stock has rallied nearly 390 per cent, turning nearly 4x from the issue price. The company was listed in July 2023 as it raised Rs 405 crore via its initial stake sale.

Asian Market Securities, initiating coverage on Senco Gold earlier in September 2024, said that the company has a strong focus in East and North India. It expects Senco to report a revenue, Ebitda and PAT growth at CAGR 18 per cent, 19 per cent and 24 per cent for FY24-27E, respectively.