Senco Gold IPO subscribed 69% on Day 1, retail portion fully booked; GMP rises

Senco Gold's Rs 405-crore initial public offer (IPO) on Tuesday attracted 69 per cent subscription on Day 1 of the bidding process. The Jewellery maker's issue received bids for 65,28,018 hares against 94,18,603 shares on the block. The portion for retail investors was subscribed fully, at 1.12 times. The HNI-NII portion was subscribed 62 per cent, with Rs 2-10 Lakh category receiving 1.23 times bids while the Rs. 10 lakh-plus category receiving 32 per cent.

Last heard, the grey market premium (GMP) for the unlisted stock stood at Rs 124 level, up over Rs 122 in the previous session. The public Issue will close on Thursday, July 6.

The Senco Gold IPO comprised of fresh equity shares worth up to Rs 270 crore and an offer-for-sale (OFS) of Rs 135 crore shares. The IPO is being sold in the Rs 301-317 price band. Retail investors looking to subscribe to the issue are required to bid for at least one lot of 47 equity shares.

On FY23 basis, the IPO was valued at 15.5 times earnings per share, 10.1 times EV/Ebitda and 0.8 times EV/Sales that Reliance Securities said seems reasonable. While, the company’s financials have improved over the last two years, its higher concentration in the Eastern region poses challenge, the brokerage said.

"As diamond jewellery market is relatively unorganised, expansive product offerings and the plans to venture into other regions in the country to improve its brand recall and customer base would take some more time for the company. On the other hand, market growth provides an opportunity for expansion going ahead. Current valuation leaves limited upside. We believe it is more or less fairly valued," Reliance Securities said.

Choice Broking said Senco Gold is demanding a P/E multiple that is at discount to the peer average. Considering its dominant market position in eastern India, diversified product offerings and well-managed operations, it is optimistic on the company’s medium-term outlook. The brokerage has assigned "Subscribe" to the issue.

Senco Gold has a manufacturing facility located at the Gems and Jewellery Park, Ankurhati in Howrah, West Bengal. It undertakes wholesale exports of its jewellery primarily to  Dubai, Malaysia and Singapore. As at March 31, 2023, it had 2,138 employees.  As on March 31, Senco Gold  had 136 showrooms, which had a  total area of approximately 409,882 square feet in 96 cities and towns over 13 states across India.

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