Better margin delivery in tough quarter
Valuation and view
We maintain our FY25 and FY26 EPS estimates.
SENCO is one of the most promising players in the organized retail jewelry market. The company has a pan-India presence with a strong network in the east region (store/revenue mix of 75%/ 80%). SENCO operated a total of 165 stores across India, with 97 company-owned stores and 68 franchise stores as of Jun’24. SENCO holds ~4% market share in the eastern region, predominately in West Bengal, where 75% of its eastern region stores are located.
The company is further expanding its footprint in eastern markets and scaling up its network in other regions. SENCO aims to expand its consumer base (presence in 16 states and 109 towns & cities) by focusing on light-weight jewelry and capturing the consumer trend of studded (250bp gain in studded ratio in the last three years to 11.4%). In line with the formalization in the jewelry market, we continue to see store expansion-led growth for SENCO (estimate addition of 34 stores during FY24-26E, taking the total to 193 stores).
We estimate a CAGR of 18%/22%/27% in revenue/EBITDA/adj. PAT over FY24- 26. The stock is currently trading at 30x FY26E EPS, with RoE/RoIC of 17%/13% in FY26E. We reiterate our BUY rating with a TP of INR1,350 (based on 35x Jun’26 P/E).
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