Multibagger stock: Senco Gold Soars 10% in Three Days! Analysts Forecast Up to 27% More Gains Ahead

Senco Gold’s share price soared over 4% on Friday, marking the third straight day of gains. Over the last three sessions, this multibagger stock has climbed more than 10% and is up 14% in the past month. In the last twelve months, Senco Gold shares have skyrocketed by over 178%.

Q1 Results Overview

Senco Gold’s first-quarter results surpassed expectations, driven by an improvement in gross margins despite weaker sales. The company’s consolidated revenue rose by 7.5% to ₹1,403.89 crore for the quarter ending June 2024. Retail sales saw a stronger increase, growing by 9.6%, with same-store sales growth at 4% year-over-year.

The company’s net profit in Q1FY25 jumped 85.3% year-over-year to ₹51.27 crore. Gross margins expanded by 480 basis points year-over-year to 17%, even with fewer wedding days and increased competition.

On the operational side, consolidated EBITDA increased by 61.82% year-over-year to ₹108.73 crore, with the EBITDA margin growing by 260 basis points to 7.7%.

Growth Prospects

Senco Gold continues to project an 18-20% growth for FY25. They opened 6 new stores, including one in Dubai and two franchises, bringing the total to 165. The company plans to open 18-20 stores in FY25.

Analysts’ Insights

According to Devanshu Bansal of Emkay Global Financial Services, the EBITDA margin beat expectations by about 250 basis points due to better franchise terms, lower discounting, and a strong gold premium. Although there is a potential short-term hedging loss of ₹0.5 billion, it is expected to be spread out over the next two to three quarters.

Emkay Global has raised its earnings estimates for Senco Gold by around 12%. Bansal notes that the stock is trading at a significant discount compared to its peers despite similar or better performance. The firm maintains a ‘Buy’ rating and has increased the target price to ₹1,400 per share, suggesting a potential upside of over 27% from Wednesday’s closing price.

Motilal Oswal Financial Services views Senco Gold as one of the most promising players in the organized retail jewelry market. They foresee growth driven by the addition of 34 stores between FY24 and FY26, bringing the total to 193 stores. Motilal Oswal estimates a compound annual growth rate (CAGR) of 18% in revenue, 22% in EBITDA, and 27% in adjusted profit after tax over FY24-26. The stock is currently trading at 30 times the FY26 expected earnings per share, with a return on equity of 17% and return on invested capital of 13% for FY26.

The firm reiterated its ‘Buy’ rating with a price target of ₹1,350 per share, implying an upside potential of nearly 23%.

As of 10:20 am, Senco Gold shares were trading 1.00% higher at ₹1,110.80 on the BSE.