SENCO

Expands Network, Margins Surge on Gold Price Gains

posted strong Q3FY26 results, with revenues rising 50% YoY despite steep gold price increases. Festive demand, lightweight jewellery focus, and robust network expansion supported growth. Margins improved sharply on better mix, operating leverage, and inventory gains. With jewellery demand resilient and organised players gaining share amid rising gold prices, SGL is well-positioned for sustained growth. Valuations remain attractive relative to peers, supporting a positive stance. Financial & Operating Performance - Revenue: +50% YoY, driven by festive demand and lightweight jewellery. - Old gold exchange: Contributed 43% of revenues, boosting growth. - EBITDA: 5x Q3FY25 levels, margin expansion +930 bps YoY. - Adjusted EBITDA (ex-duty impact): 3.8x Q3FY25, margin uplift from product mix and operating leverage. - Inventory gains: 200–250 bps margin benefit from gold price surge. - Net profit: 7.9x Q3FY25, aided by higher other income. Demand Trends & Strategy - Jewellery demand remains strong despite gold price surge. - Wedding season and Valentine’s Day supported Q4 momentum; growth expected >25% in Q4FY26. - FY27 guidance: ~20% growth. - Lightweighting strategy: Expanding 9, 14, and 18 carat jewellery to maintain affordability. - Product innovation: ~100 new designs launched daily across gold and diamond categories. - Hyperlocal design strategy tailored to regional tastes. Network Expansion - Store count: 196 as of Dec 2025, with 21 new stores added in 9MFY26. - Pipeline: 3–4 more stores in Q4, milestone of 200 stores by FY26-end. - FY27 plan: Add 18–20 stores, with higher share of franchisee formats (currently ~33%). - Expansion beyond Eastern India to diversify geographic presence. Valuation & Outlook - Valuation: 17x FY27E earnings, at lower end of jewellery retail peers. - Rating: Overweight, supported by strong demand, lightweight positioning, and attractive valuations.