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SENCO Gold IPO comprise a combination of a fresh issue and an offer for sale (OFS) with a total IPO issue size of ₹405 crore. The price band for the issue is between ₹301 and ₹317. Senco Gold Limited is a pan-India jewelry retailer with large presence in East and some presence in the North. SENCO Gold as a jewellery retail player has a history of more than 5 decades

About SENCO Gold Limited:

• Senco Gold Ltd was incorporated in 1994 as a jewellery retailer.
• Apart from gold and diamond jewellery, Senco also sells jewellery made of silver and platinum, as well as precious and semi-precious stones.
• It also offers costume jewellery, gold, and silver coins.
• Senco operates through Company Operated Showrooms and Franchisee Showrooms. As on March 31, 2023, there were 75 Company Operated Showrooms and 61 Franchisee Showrooms.
• The company products are sold under the Senco Gold & Diamonds tradename, through multiple channels like 75 Company Operated Showrooms, 61 Franchisee Showrooms located across 96 cities and towns in India and through various online platforms, including their own website.
• Senco has a dedicated design team of 20 designers as on March 31, 2023, with focus on developing new products and designs to cater to customers’ preferences.
• It has put in place a team of craftsmen to cater to varying regional and ethnic tastes of Indian customers. he manufacturing of their jewellery is carried out mainly by over 170 experienced craftsman. They also manufacture machine crafted jewellery and source jewellery from third party vendors.
• Currently, Senco Gold Ltd offers more than 108,000 designs for gold jewellery and over 46,000 designs for diamond jewellery.
• Senco has a manufacturing facility located at the Gems and Jewellery Park, Ankurhati in Howrah, West Bengal.
• SENCO Gold undertakes wholesale exports of their jewellery primarily to Dubai, Malaysia and Singapore.
• As at March 31, 2023, SENCO Gold had 2,138 employees.

SENCO Gold IPO: Financials

Anchor Investors

SENCO Gold IPO: Salient Points

• The company clocked a Rs. 4,077 cr revenue in FY23. Out of this 82% came from East and North-East India with 70% coming from West Bengal. It is expanding its presence in North but is wary of entering West or south markets at this juncture.
• The Promoters are 4th or 5th generation jewellers.
• It is good to note that promoters who hold ~77% stake in the company are not diluting their stake through the IPO. Due to issue of fresh shares in the IPO their stake shall stand at 68% post the IPO.
• They are not selling any shares in the IPO (68% holding post issue).
• The company is having support of SAIF Partners India IV Ltd. They invested in the company in 2014. The Rs. 135 cr offer for sale (OFS) is by PE investor SAIF Partners who is part exiting now and its stake will get reduced from 19% to 12%.
• SENCO Gold Limited standard Showrooms have an average ticket Size of ~₹ 48,000,
• Through their D’Signia Showrooms and Vivaha collection. Senco Gold aims to cater to customers seeking heavier or premium designer jewellery.
• Senco has launched an online platform of the purchase of digital gold, mydigigold.com, which allows customers to accumulate gold in a physical third-party secure vault . They can later sell the same online or redeem the gold in the form of jewellery at any of companies Showrooms.
• SENCO Gold also offers jewellery purchase schemes with monthly installments and these have been rated as [ICRA] A (stable) to the extent of ₹ 235 crore by ICRA Limited.
• SENCO Gold bank facilities are rated [ICRA]A (stable) to the extent of ₹ 1,200 crore.
• Share of diamond, semi-precious stone and platinum jewellery which are relatively higher-margin has risen to 9% in FY23 in the revenues.
• Comparison with Peers

• On FY23 earnings the IPO is valued at 15.5x P/E and compares favorably with Peers.

• SENCO Gold Limited inventory turnover is 2.5x, much higher than Kalyan (2x) and comparable to Titan (2.4x).
• I intend to apply in SENCO Gold IPO. In my view there are even charges of listing gains as well as steady performance there after. It is worth mentioning that my opinions have many time been off the mark or have been proved wrong. Also one should know that most jewellery sector stocks have not rewarded investors in the past.
• It is comforting to note that In April 2022, Senco raised Rs. 75 cr from Oman India Joint Investment Fund via a private placement, at Rs. 282 per share. The IPO price, that way looks reasonable considering the time of more than a year, growth in the period and general trajectory of the market.
• Further as the fresh issue proceeds will go towards funding working capital needs, Senco’s growth outlook looks sustainable at this point of time.
• GMP as reported on social media has been Rs. 90-100
• Please do your own diligence as this IPO as there is good amount of risk in all equity investments including IPOs.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.