Synopsis: Senco Gold's stock experienced a significant decline of approximately 19% in early trading on Friday, February 14, 2025, following the release of its Q3 FY25 financial results. The company reported a substantial decrease in net profit and EBITDA, despite an increase in revenue from operations. Market analysts attribute the stock's decline to the sharp drop in profitability, overshadowing the revenue growth.
In the early hours of trading on Friday, February 14, 2025, Senco Gold Ltd's shares took a significant hit, dropping 18.78% to Rs. 363 from the previous close of Rs. 446.95 on the Bombay Stock Exchange (BSE).
This decline was precipitated by the company's announcement of a weak set of Q3 FY25 earnings.
The trading session saw a total of 1.17 lakh shares exchanged, amounting to a turnover of Rs. 4.44 crore on the BSE.
It's noteworthy that the stock had previously reached its 52-week low of Rs. 342.55 on March 14, 2024, and a 52-week high of Rs. 772 on October 7, 2024.
Financially, Senco Gold reported a consolidated net profit of Rs. 33.4 crore for Q3 FY25, marking a steep decline of 69.4% compared to Rs. 109.3 crore in the same quarter of the previous fiscal year.
The company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) also saw a downturn, falling 56% to ₹79.96 crore from Rs. 181.1 crore year-over-year.
Despite these declines, revenue from operations rose by 27.3%, reaching Rs. 2,102.5 crore in Q3 FY25, up from Rs. 1,652.2 crore in Q3 FY24.
This increase in revenue was achieved amidst high volatility in gold prices during the quarter, which recorded a 22% year-over-year increase and a 20% rise since April 2024.
Suvankar Sen, Managing Director and CEO of Senco Gold, commented on the performance, stating, "High volatility was observed in gold prices during Q3, recording a 22% YoY increase and a 20% increase since April 2024. However, consumer demand for gold remained robust throughout Q3. The reduction in customs duties during Q2 rather acted as a tailwind for Q3 sales, especially during Dhanteras and Diwali."
From a technical perspective, Senco Gold's stock has exhibited low volatility over the past year, with a beta of 0.8.
The Relative Strength Index (RSI) stands at 39.2, indicating that the stock is neither in the overbought nor oversold zone.
An RSI of 70 or above suggests more buyers than sellers for the stock. Currently, the jewellery stock is trading below its 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day moving averages.
Senco Gold Limited is a prominent jewellery retailer in India, primarily dealing in gold and diamond jewellery.
The company also offers products made of silver, platinum, and precious and semi-precious stones, along with costume jewellery, gold and silver coins, and silver utensils.
Their extensive collection boasts approximately 108,000 designs for gold jewellery and over 46,000 designs for diamond jewellery, including a variety of handcrafted pieces.
Conclusion:
The significant drop in Senco Gold's stock price underscores the market's sensitivity to profitability metrics, even in the face of rising revenues.
While the company has demonstrated resilience in increasing its revenue amidst volatile gold prices, the sharp decline in net profit and EBITDA has raised concerns among investors.
Moving forward, Senco Gold may need to implement strategic measures to enhance profitability and restore investor confidence.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
