Senco Gold shares jump 5% today; should you, buy, hold or sell?

Shares of Senco Gold climbed 5 per cent in Wednesday's trade as the jeweller recorded a recovery in diamond jewellery sales in the March quarter. In its latest business update, Senco said its sales growth for the quarter grew 19 per cent, which was slightly above analyst expectations. 

Following the development, the stock hit its 5 per cent upper circuit limit at Rs 318.25. 

Antique Stock Broking said a recovery in diamond jewellery sales, which grew 39 per cent in Q4 compared with 9 per cent in the first nine months, was encouraging. 

"We remain optimistic about the company’s medium- to long-term prospects, led by: a) Its strong positioning in East India, backed by its deep understanding of local consumer preferences; b) Strategic focus on lightweight jewelry, enabling a broader customer reach across different age groups; c) The benefits of transition it enjoys from unorganized to organized jewellery retail," Antique Stock Broking said. 

MOFSL, which has a 'Neutral' rating on Senco Gold, said the impact of customs duty reduction in Q2 and Q3, along with other factors, had led to margin contraction of 80-90 bps, resulting in an adjusted Ebitda margin of 6.2 per cent. 

"But strong diamond jewellery sales in Q4 are expected to improve margins, with EBITDA margin outlook remaining positive. The full impact of the customs duty cut was absorbed by 3Q, with no further margin headwinds seen in 4QFY25," it said.

Antique Stock Broking said Ebitda margin for Senco Gold is expected to witness a recovery in Q4FY25 as the impact of gold volatility, gold hedging, and reduction in custom duty has already exhausted in 9MFY25. 

"Further, we expect the addition of stores (20 per annum during FY26 and FY27) to aid revenue growth going ahead. We maintain BUY rating with a target price of Rs 510 based on 25x PER on FY27E EPS," Antique said.