Senco Gold IPO subscribed 1.5 times on day 2 so far; NII, retail categories fully booked

The Rs 405-crore initial public offering (IPO) of Senco Gold witnessed a strong response from the investors during the second day of the bidding process, majorly led by retail investors and non-institutional bidders (NIIs). The issue was subscribed 69 per cent on day 1.

Senco Gold is selling its shares in the range of Rs 301-317 apiece, with a lot size of 47 equity shares until July 4. The issue includes fresh equity shares amounting to Rs 270 crore and an offer-for-sale (OFS) of Rs 135 crore from its existing shareholders existing SAIF Partners India IV.
 

According to the data from the BSE, the investors made bids for 1,40,53,188 equity shares, or 1.5 times, compared to the 94,18,603 equity shares offered for the subscription by 13.15 pm on Wednesday, July 5, 2023.

The quota for retail investors was booked 2.33 times whereas the allocation for non-institutional bidders fetched 1.5 times bids but qualified institutional bidders was not even off the mark as of the same time.

A day ahead of its IPO, Senco Gold raised Rs 121.50 crore from 21 anchor investors by allocating 38,32,807 equity shares at Rs 317 apiece to them, a BSE circular said. Anchor investors included Ashoka Whiteoak Emerging Markets Trusts, Jupiter India Fund, Sundaram Mutual Funds, Bandhan Emerging Business Fund, Templeton India, 3P India Equity Fund among others.

Incorporated in 1994, Senco Gold is a pan-India jewelry retailer, which sells its products under its brand name 'Senco Gold & Diamonds' through its 136 showrooms across 96 cities and towns in 13 states throughout the country. It is the largest organized jewelry retailer in eastern India in terms of number of stores.

Brokerage firms are majorly positive on the issue and suggest investors to subscribe for it citing the growth potential, strong market share, sound financial performance and structural shift. However, others believe that the issue is aggressively priced, leaving limited upside potential on the table.

Senco is the largest organized jewelry retailer in the eastern region of India, with a history of over five decades. They operate through multiple channels, allowing flexible capital allocation and expanding their geographic presence. Customer retention is a priority through quality standards, loyalty programs, and hyper-local offerings, said GEPL Capital with a 'subscribe' rating.

The company has a strong brand name with heritage and legacy of over five decades. The company is valued at P/E of 16 times with a market cap of Rs 2,460.5 crore post issue of equity shares and return on net worth of 18.9 per cent.We believe that issue is fairly priced, and recommend 'subscribe for long term' rating for the issue", said Anand Rathi Share and Stock Brokers.

For the financial year ended on March 31, 2023, the company reported a net profit at Rs 158.48 crore, compared to Rs 129.10 crore in the year ended on March 31, 2022, while its total revenue stood at Rs 4,108.54 crore in FY23, which was Rs 3,547.41 crore in the previous financial year.

Senco's wide range of product offerings caters to diverse customer segments. The company focuses on catering to the younger generation and the upwardly mobile in India. The Everlite brand of light-weight gold and diamond jewelry varies from approximately Rs 5,000 to Rs 60,000 and is targeted at the upwardly mobile, said Hensex Securities with a 'subscribe' tag.

However, the brokerage has cited fluctuations in the gold rates prices, minimum threshold of diamonds and fees paid to Debeer India, negative cash flows, increased debt as the key risks for the company.

IIFL Securities, Ambit Capital and SBI Capital Markets are book-running lead managers to the issue, while Kfin Technologies has been appointed as the registrar to the issue. Shares of the company will be listed on both BSE and NSE, with July 14 as the tentative date of listing.


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