Summary
Senco Gold Limited - Q3 FY26 Earnings Call Summary Friday, February 13, 2026, 11:00 AM
Event Participants
Executives 2 Sanjay Banka (Group CFO & Head IR), Suvankar Sen (MD & CEO)
Analysts 11 Abhijeet (Antique Stock Broking), Bharat (MC Pro Research), Devanshu Bansal (Emkay Global), Jinesh (Individual Investor), Mihir Shah (Nomura), Pallavi (Sameeksha), Raj Sarraf (Finvestors), Rupesh (Long Equity Partners), Sonal (Prescient Capital), Venkat (MIT), Vijay Chauhan (Right Horizons PMS)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹3,000 crores | +50% YoY; historic high driven by strong Dhanteras sales (₹1,716 crores in Oct alone) and wedding demand. |
| EBITDA | ₹404.6 crores | +406% YoY; adjusted EBITDA (ex-custom duty impact) rose from ₹107 crores to ₹404 crores. |
| Adjusted EBITDA Margin | 13.2% | +210 bps YoY; influenced by high operating leverage and realization gains of ~3.5% due to gold price appreciation. |
| PAT | ₹264 crores | +689% YoY; adjusted PAT up 390% YoY (from ₹54 crores to ₹264 crores). |
| Studded Ratio (Value) | 38% growth | +38% YoY in value terms and +10% in volume terms, significantly aiding profitability. |
| Inventory | ₹4,602 crores | +55% YoY; value increase driven by gold price escalation and festive stocking; volume remained largely stable. |
| Inventory Days | 166 - 188 days | Range-bound; managed via AI-based real-time monitoring software. |
| Gold Volume (Grammage) | -3% (Q3) | -3% QoQ and -10% for 9M FY26; consumers shifting to lighter weights/lower carats due to high prices. |
| Average Ticket Value (ATV) | ₹93,000 | Increased due to 65% rise in gold prices, though grammage per ticket reduced to 5-6 grams. |
Geographic & Segment Commentary
- East (Core Market): Maintained dominant position with 18-20% growth; remains the bedrock of the company’s hyperlocal strategy and design-led offerings.
- Non-East Markets: Reported robust growth of 25-30% on a lower base, with revenue reaching approximately ₹1,100 crores for 9M FY26 and a target of ₹1,700 crores for FY27.
- Own Stores vs. Franchisee: Own stores contributed 65% of revenue (20% gross margin) while franchisees contributed 33% (7-8% gross margin); shifting mix toward own stores boosted Q3 profitability.
Company-Specific & Strategic Commentary
- Product Innovation: Launched “9-carat” hallmarked jewellery to maintain consumer budget accessibility amidst gold prices exceeding ₹1.5 lakh per 10 grams.
- Hyperlocal Design Strategy: Introduced 6,000+ new gold and 3,000+ diamond designs this quarter, leveraging AI data to match store-level inventory with local demand.
- Digital & Gen Z Focus: Progressing with the Melorra acquisition to target millennials and Gen Z; management plans a separate call to detail the integration strategy.
- Old Gold Exchange: Strategic shift in consumer behavior noted with old gold exchange rising to 45-50% of sales (up from 25-30%), acting as a natural hedge and liquidity tool.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 25% - 30% (Q4 FY26) | Conservative guidance despite current momentum; accounts for exam season and Holi before Akshay Tritiya. |
| Revenue Growth | 20%+ (FY27) | Expected to be driven by 18-20 new store openings and continued market share gains from unorganized players. |
| Sustainable EBITDA Margin | 7.5% - 7.8% (FY27) | Normalizing from the “extraordinary” FY26 levels; assumes stable but elevated gold prices. |
| Store Openings | 18 - 20 stores (FY27) | Planned mix of 8-10 own stores and 8-10 franchisee showrooms. |
Risks & Constraints
| Risk | Context |
|---|---|
| Gold Price Volatility | Management noted extreme turbulence in hedging operations during rapid price swings, requiring high margin calls and liquidity management. |
| Hedging Exposure | Hedging ratio currently reduced to 55-60% (from historical 80%+) due to high volatility; exposes the P&L to potential realization losses if prices drop sharply. |
| Volume Compression | High gold prices led to a 10% volume decline in 9M FY26; the company is mitigating this by pivoting to lower caratage (14k/9k) and lightweight designs. |
Q&A Highlights
Margin Sustainability
- Question: What is driving the margin improvement beyond just inventory gains? (Mihir Shah)
- Answer: It is a mix of product strategy and operating leverage. Lightweight jewellery carries higher effective making charges (up to 25%), and with sales growing 50% while fixed opex remains stable, the leverage benefit is substantial. (Sanjay Banka)
Hedging Strategy
- Question: Why has the hedging ratio dropped to 55-60%? (Bharat)
- Answer: Extreme volatility and liquidity pressures (margin calls) necessitated a more prudent balance-sheet approach. We will return to 80-90% hedging only when price stability is achieved. (Suvankar Sen/Sanjay Banka)
Inventory Efficiency
- Question: How are you managing the stretched balance sheet and high inventory values? (Devanshu Bansal)
- Answer: We are not targeting a reduction in days but an improvement in efficiency. We utilize AI tools to identify slow-moving high-weight stock and recycle it into high-velocity lightweight designs. (Sanjay Banka/Suvankar Sen)
Customer Advances
- Question: Growth in customer advances seems soft; what are the plans here? (Devanshu Bansal)
- Answer: The Q3 dip is seasonal as customers redeem advances during Dhanteras. We are seeking credit rating enhancements to increase our ROCE-linked deposit limits to ₹500 crores. (Sanjay Banka)
Key Takeaway
Senco Gold delivered a milestone performance in Q3 FY26, surpassing ₹3,000 crores in revenue and achieving a record 13.2% adjusted EBITDA margin. While the results were bolstered by significant realization gains and operating leverage from festive sales, the company demonstrated strategic agility by introducing 9-carat and lightweight jewellery to counter 65% YoY gold price inflation. Despite a 10% volume decline for the 9-month period, Senco grew its diamond-studded business by 38% and expanded its non-East footprint. Management has guided for a sustainable EBITDA margin of 7.5%-7.8% for FY27, reflecting a normalization from this quarter’s extraordinary levels. The primary focus remains on navigating gold price volatility through a tactical 55-60% hedging ratio and leveraging the Melorra acquisition to capture younger demographics, while aiming for a 20%+ growth trajectory in the coming fiscal year.
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