Senco Gold shares climbed 40% in a month; what should existing investors do?

Shares of Senco Gold Ltd have staged a sharp recovery in the past one month, rising 40.34 per cent as per Friday's (March 11) closing price of Rs 334.15. Despite the mentioned uptick, the stock has crashed 52.29 per cent over the six-month period. Bourses BSE and NSE have put the securities of Senco under the long-term ASM (Additional Surveillance Measure) framework. Exchanges put stocks in short-term or long-term ASM frameworks to caution investors about high volatility in share prices.

In its latest business update, the jewellery maker said its year-on-year (YoY) revenue growth for the fourth quarter (Q4 FY25) grew by 19.1 per cent. Senco mentioned that it achieved 39 per cent growth in diamond sales in Q4 FY25.

The company underlined that the customs duty reduction impact in Q2 (FY25) and Q3 (FY25) and other business factors had impacted its margin by 80-90 basis points (bps), leading to a 6.2 per cent adjusted EBITDA margin. "However, the improved performance in Q4 led by diamond jewellery sales is likely to result in improved business margin and outlook for Q4 EBITDA margin is very positive. Full impact of customs duty cut has already been taken up to Q3 and we don't foresee any other factor impacting gross margin during Q4 FY25," it added.

"We are confident of a very strong start to FY26, fuelled by robust demand during Poila Baisakh, Akshaya Tritiya, and the continued momentum in the wedding season — all expected to significantly boost Q1 FY26 sales," Senco further stated.

A market expert suggested that those holding the stock can continue with their position. In addition, a few brokerages largely stayed positive on the counter.

"As gold prices are quoting on a higher note, one needs to carefully monitor the company's sales and revenues over the next couple of quarters. That said, existing investors can hold on to the stock," said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.

Antique Stock Broking noted that the recovery in diamond jewellery sales has been encouraging. "We remain optimistic about the company's medium- to long-term prospects, led by: a) its strong positioning in East India, backed by its deep understanding of local consumer preferences; b) strategic focus on lightweight jewellery, enabling a broader customer reach across different age groups; and c) the benefits of transition it enjoys from unorganized to organized jewellery retail," Antique Stock Broking stated.

"Strong diamond jewellery sales in Q4 are expected to improve margins, with EBITDA margin outlook remaining positive. The full impact of the customs duty cut was absorbed by Q3, with no further margin headwinds seen in Q4 FY25," MOFSL, which has a 'Neutral' rating on Senco Gold, said.

As per a recent BSE filing, the combined promoter and promoter group shareholding of Senco was at 64.22 per cent.

Meanwhile, Indian equity benchmarks remained closed today on account of Dr Baba Saheb Ambedkar Jayanti. Domestic indices will resume action on Tuesday during usual hours.