Senco Gold's Q1 FY26 Results: How This Jeweler Doubled Profits & Outshone Market Volatility

Senco Gold Limited has just unveiled its Q1 FY26 results, and if you’re looking for a shining example of resilience and growth in the Indian consumer discretionary space, look no further. Despite a challenging macroeconomic backdrop marked by volatile gold prices and global uncertainties, Senco Gold has delivered a performance that truly stands out. Let’s delve into what these numbers tell us about the company’s future trajectory.

A Golden Quarter for Sales: Expanding Footprint Fuels Topline Growth

Senco Gold kicked off FY26 on an exceptionally strong note, demonstrating robust topline expansion. Consolidated Revenue from Operations soared by a remarkable 30.1% year-on-year (YoY) to ₹18,262.8 million. Quarter-on-quarter (QoQ) growth was equally impressive at 32.6% over Q4 FY25. This isn’t just a flash in the pan; it’s a testament to the company’s strategic expansion and effective demand management.

To put this in perspective, here’s how the company’s total income has trended over recent quarters:

What drove this glittering performance? A combination of factors:

• Strategic Store Expansion: The company added 10 new showrooms in Q1 FY26 (5 COCO, 1 Sennes, 1 FOCO, 4 FOFO formats), expanding its total network to 186 across 121 towns and cities. This aggressive expansion, particularly leaning into the franchisee-owned, franchisee-operated (FOFO) model, is a direct contributor to increased sales reach. Franchisee showrooms now contribute a significant 35% of total revenue.
• Strong Same Store Sales Growth (SSSG): Beyond new stores, existing stores also performed admirably, with a blended SSSG at an impressive 19.6%. This indicates healthy organic demand and successful engagement with repeat customers. COCO showrooms (63% of retail revenue) grew 25%, while FOFO business (37% of retail revenue) grew 34%, showcasing broad-based strength.
• Festive Boost: Festivals like Akshay Tritiya and Poila Baishakh provided a significant tailwind, translating into robust retail performance despite the broader market’s July correction.
• Mitigating Gold Price Volatility: Despite gold prices surging by a whopping 32% YoY and 5% QoQ (reaching an average of ₹9,608/gram), consumer demand remained elevated. How did they achieve this? The old gold exchange program played a crucial role, increasing from about 25% a few years ago to almost 40% in Q1 FY26. This initiative effectively cushioned the impact of higher prices and kept demand alive. This highlights management’s proactive approach to market dynamics.

Management has reaffirmed its ambitious outlook for FY26, targeting an 18%-20% revenue growth. The Q1 performance, with 30.1% growth, puts them well on track, potentially even surpassing this guidance. The sales growth has been driven by a strong combination of volume (new stores, strong SSSG) and price (higher gold rates, improved product mix, and increased making charges in certain categories).

Key Business Metrics: The Sparkle in the Mix

Beyond headline sales, several operational metrics reveal the underlying strength of Senco Gold’s business model and why it is well-positioned in the current Indian macro environment.

• Showroom Expansion Continues:

  Period	Company	Franchisee	Total
  FY25	103	72	175
  Q1 FY26	110	76	186
  The focus on expanding the showroom network is a clear long-term growth strategy, tapping into India’s robust domestic demand, aligning perfectly with the broader economic trend of preferring domestic-growth themes. The company plans to open 20 stores in FY26 (10 owned, 10 franchisee), aiming for a long-term mix of 65-70% franchisee stores to improve liquidity and Return on Capital Employed (ROCE).

• Improving Product Mix: The Stud Ratio Shines: One of the most impactful changes observed this quarter is the Stud Ratio, which climbed to 11.6% in Q1 FY26 from 10.9% in FY25. This metric, representing the share of diamond jewellery sales, is crucial. Diamond jewellery typically commands higher margins compared to traditional gold jewellery. The increase here directly contributed to the impressive margin expansion we’ll discuss next. The management is strategically focusing on 18-carat, 14-carat, and 9-carat jewellery (plain or diamond-studded) to cater to younger generations and lower ticket size preferences.
• Higher Average Realizations: Both Average Sales Price (ASP) and Average Ticket Value (ATV) saw significant increases. ASP rose to ₹52,300 in Q1 FY26 (from ₹48,100 in FY25), and ATV reached ₹79,400 (from ₹73,000 in FY25). This suggests customers are either buying higher-value items or spending more per transaction, reflecting strong consumer sentiment aided by easing inflation.
• Inventory Management for Growth: Inventory investment increased to ₹35,584.5 million in Q1 FY26 from ₹32,992.5 million in March 2025. This proactive build-up is strategic, preparing the company for the upcoming festive and wedding seasons, which are typically high-demand periods. While annualized inventory days saw a slight increase to 169 days, it’s a calculated move to support future sales, and management appears confident in its efficiency measures.

Earnings: Margins Expand, Profits Double! 🚀

The most compelling aspect of Senco Gold’s Q1 FY26 performance is undoubtedly the significant jump in profitability. Adjusted EBITDA surged by 68.8% YoY to ₹1,835.9 million, with the margin expanding to a robust 10.1% from 7.7% in Q1 FY25. Even more impressively, Adjusted PAT more than doubled, increasing by a staggering 104.1% YoY to ₹1,046.5 million, pushing the PAT margin to 5.7% from 3.7% in Q1 FY25.

Here’s a look at the Adjusted EBITDA and PAT trends:

This significant margin expansion wasn’t accidental. It was driven by:

• Higher Diamond Jewellery Sales: As noted by the improving Stud Ratio, the increased proportion of diamond jewellery in the sales mix inherently boosts overall margins. Management highlighted a 35% YoY volume growth and over 50% YoY value growth in diamond jewellery.
• Improved Product Mix: Beyond diamonds, a generally favorable product mix contributed to better realization.
• Increased Making Charges: Proactive adjustments to making charges in certain categories helped offset rising gold metal loan (GML) interest rates and appreciated gold prices.
• Gold Price Appreciation: While posing a demand challenge, the appreciation in gold prices also led to better realization on existing inventory, contributing to gross margin improvement.
• Disciplined OPEX Management: Despite strong growth, operating expenses were managed tightly, leading to operational leverage. Marketing costs, for instance, grew at a slower pace (10.1% YoY) than revenue (30.1% YoY), showcasing efficiency.

Management’s full-year guidance for FY26 points to EBITDA margins of 6.8%-7.2% and PAT margins of 3.7%-4.0%. The Q1 FY26 performance of 10.1% EBITDA margin and 5.7% PAT margin significantly exceeds this guidance. This suggests that the company is either being very conservative in its outlook or Q1 benefited from unique seasonal/market factors that may not fully replicate through the year. Nevertheless, this strong start positions them as a Super Grower for the quarter, showcasing a rare combination of robust revenue growth with exceptional profit growth.

Working Capital & Financing: Balancing Growth with Prudence

Managing working capital is crucial for a retail business like Senco Gold, especially one dealing with high-value inventory like gold.

• Inventory Levels: As mentioned, inventory increased from ₹32,992.5 million in March 2025 to ₹35,584.5 million in June 2025 to meet future demand. While this contributes to a slight increase in annualized inventory days to 169 days (from 166 in FY25), it’s a necessary investment for a growth-oriented retail company preparing for festive and wedding seasons. We’ll be watching to ensure this inventory translates into sales efficiently in subsequent quarters.
• Cash Conversion Cycle (CCC): The CCC increased slightly to 163 days in Q1 FY26 from 160 days in FY25, largely mirroring the increased inventory. A stable or improving CCC is generally preferred, but a slight increase during a high-growth phase with inventory build-up for future sales can be acceptable if sales follow suit.
• Trade Receivables: These have increased from ₹810.4 million in Mar-25 to ₹1,450.5 million in Jun-25, which generally aligns with the strong sales growth.
• Gold Metal Loan (GML) Dynamics: The reliance on GML as a percentage of total borrowings decreased to 51% in Q1 FY26 from 67% in FY25, with working capital borrowings (WCL) increasing to 49%. The blended borrowing cost also saw an increase to 9.6% (from 5.9% in FY25). This change in financing mix and increased cost bears watching, though management notes the risk associated with GML rates has subsided and they expect blended ROI at sub 7%. The dynamic hedging strategy, with Q1 coverage at 55-60% (within Board policy of 50-80%), aims to protect liquidity rather than speculate on gold price movements.
• Capital Gearing: Positively, the Debt-to-Equity (D/E) ratio improved significantly to 0.8 in Q1 FY26 from 1.18 in FY25. This indicates a healthier capital structure and reduced reliance on debt, even as the company expands its footprint. This deleveraging provides comfort regarding the company’s financial health.

Capital Expenditure: Building for the Future

Senco Gold’s ongoing showroom expansion signifies its commitment to CapEx for growth. The addition of 10 new showrooms in Q1 alone, with plans to roll out at least 10 more (aiming for 20 total) stores in FY26, underlines an aggressive growth strategy. This CapEx is clearly for growth and should directly contribute to future revenue streams. The improved D/E ratio suggests this expansion is being funded prudently, likely through a mix of internal accruals and manageable debt. The management’s disciplined approach here bodes well for sustainable expansion.

Investment Insight: A Domestic Gem in a Volatile Market

In the current Indian economic climate, where global uncertainties and FPI outflows (especially in July) are creating caution, Senco Gold stands out as a compelling domestic-growth theme. Its strong performance in Q1 FY26, driven by robust domestic demand, strategic expansion, and improved operational efficiency, aligns perfectly with the market’s current preference for sectors benefiting from capex revival and strong domestic consumption.

While the market saw a July correction due to weak earnings and cautious guidance from many companies, Senco Gold’s results offer a positive counter-narrative. The company’s ability to not only maintain but significantly grow its top and bottom line amidst rising gold prices demonstrates strong management capability and adaptability.

Key Takeaways:

• Exceptional Growth: Senco Gold is on a fast track, with Q1 FY26 revenue growth significantly outpacing its conservative FY26 guidance.
• Margin Expansion Story: The strategic shift towards higher-margin diamond jewellery, increased making charges, and disciplined cost management are proving highly effective, leading to a remarkable surge in profitability.
• Strategic Expansion: The continued focus on expanding the showroom network through both COCO and FOFO models promises sustained future growth, particularly in Tier 3 & 4 towns.
• Resilient Business Model: The ability to navigate high gold prices via the old gold exchange program and dynamic hedging underscores a robust operational strategy.
• Healthy Financials: Improving debt-to-equity ratios add to the comfort for long-term investors, showcasing sound financial management despite increased borrowing costs.

Senco Gold appears to be navigating the market confidently, showcasing strong earnings visibility and valuation comfort, making it a compelling stock-picking candidate within the domestic consumption theme. The management’s execution capability to deliver on, and even exceed, guidance is clearly evident this quarter.

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