Senco Gold IPO – Dates, GMP, Financials, Valuation and Review

Senco Gold IPO would open for subscription on 4th July, 2023. Company is a pan-India jewellery retail player. Senco Gold IPO GMP today indicates Rs 70 to 80 per share with low volume. Is this like another Kalyan Jewellers IPO that listed with a 15% discounted price? In this article we would provide Senco Gold IPO Details, Financials, Objects of the IPO, Valuation, Review and Conclusion.

Senco Gold IPO Issue Details and Price

IPO Opening Date 04-Jul-23
IPO Closing Date 06-Jul-23
IPO Listing Date 16-Jul-23
Issue Type Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price band Rs 301 to Rs 317 per equity share
Lot Size 47 Shares
Min Order Quantity 47 Shares
Listing at BSE and NSE
Total Issue Size Rs. 405 Crores
    Fresh issue     Rs. 270 Crores
    OFS     Rs. 135 Crores
QIB shares offered Not less than 50% of the offer
NII/HNI shares offered Not more than 15% of the offer
Retail shares offered Not more than 35% of the offer

We have used Senco Gold RHP filed on SEBI website as source data for this review and analysis.

Senco Gold IPO – Dates, GMP, Financials, Valuation and Review

About Senco Gold Limited

They are a pan-India jewellery retail player with a history of more than five decades and have a fourth generation entrepreneur in the jewellery industry as its Promoter.

They are the largest organised jewellery retail player in the eastern region of India based on number of stores. Among eastern India based jewellery retailers, they have the widest geographical footprint in non-eastern states.

They primarily sell gold and diamond jewellery and also sell jewellery made of silver, platinum and precious and semi-precious stones and other metals.

Its other offerings also include costume jewellery, gold and silver coins and utensils made of silver.

Its products are sold under the “Senco Gold & Diamonds” trade name, through multiple channels, including its 75 Company Operated Showrooms and 61 Franchisee Showrooms (including four franchisee owned and Company operated Showrooms) and various online platforms, including its website

How are Senco Gold Limited Financials?

Here are the financials of the company.

In summary, the company’s revenues and total assets witnessed significant growth over the years.  While company earns thin margins, these are stable in the last 3 years.

Financial Year ending / Period ending (Amt in Crores)
Particulars FY21 FY22 FY23
Total Assets 1,559.3 2,100.2 2,905.3
Total Revenue 2,674.9 3,547.4 4,108.5
Profit After Tax 11.8 39.8 31.7
Profit % 0.44% 1.12% 0.77%

What are the Objects of the IPO?

The objects of the offer have both OFS and fresh issue.

1) OFS – Under offer for sale, selling shareholders would sell the shares and proceeds would go to them. The company would not get anything.

2) Fresh issue – Company intends to utilize the fresh issue for the following:

  • Funding working capital requirements of the company and
  • General corporate purposes.

What is the valuation of Senco Gold’s IPO?

Senco Gold IPO price band is Rs 301 to 317 per share.

  • If we consider last year FY23 EPS of Rs 22.87, P/E ratio works out to be 14x
  • If we consider Last 3 Years Weighted EPS of Rs 19.43, P/E ratio works out to be 16x
  • The listed peers like Titan Company Limited is trading at P/E 81x (Highest) and Kalyan Jewellers Limited is trading at P/E of 30x (Lowest) and industry average P/E is 55x. Hence, the IPO Price band at P/E of 14x to 16x is attractively priced.

What is Senco Gold GMP now?

Senco Gold IPO GMP today in general is between Rs 70 to 80 per share.

While GMP as per ipowatch indicates Rs 55, as per Chanakya Nipothi, Senco Gold GMP is Rs 75.

What are Senco Gold IPO Dates?

IPO Opening Date Tuesday, 4 July 2023
IPO Closing Date Thursday, 6 July 2023
Basis of Allotment Tuesday, 11 July 2023
Initiation of Refunds Wednesday, 12 July 2023
Credit of Shares to Demat Thursday, 13 July 2023
Listing Date Friday, 14 July 2023
Cut-off time for UPI mandate confirmation 5 PM on Jul 6, 2023

What are the positive Factors in Senco Gold IPO?

1) The company has a strong brand name with a legacy of over 5 decades.

2) As per CRISIL report, the company is one of the largest jewellery retail players in the eastern region of India based on number of stores.

3) It runs on a business model where it has a strong company operated showroom based complemented with asset light franchise model. This would lead to operational leverage.

4) Company had strong revenue growth in the last few years.

5) Though company margins are thin, it earns consistent margins.

6) IPO price is attractively priced compared to its peers.

What are the Risk or Negative Factors in Senco Gold IPO?

1) Strong competition in the Indian jewellery market poses a risk of losing customers and market share, impacting company business and financial condition.

2) Insufficient working capital may have a negative effect on its business, financial condition, and operations.

3) Failure to obtain necessary approvals, permits, and licenses may adversely affect company operations.

4) Past legal proceedings and investigations by tax and customs authorities could have an adverse impact on the business and financial conditions.

5) Inability to develop innovative and popular jewellery designs may reduce demand and impact its revenues.

6) Heavy dependency on sale of gold jewellery makes its business vulnerable to factors affecting gold procurement and sales.

Senco Gold IPO Review and Conclusion

Is Senco Gold IPO good or bad for investment?

Senco Gold Limited’s IPO has both positive and negative factors for investors to consider.

Company has strong brand name with legacy of over 5 decades. It is one of the largest jewellery retail players in the eastern region of India with strong revenue growth in the last few years. Its share price is attractively priced.

Though company margins are thin, it earns consistent margins.

Company has risk factors like strong competition, heavy dependency on key personnel and too much dependency on sale of gold jewellery. Investors should not forget what happened when Kalyan Jewellery came for IPO. It got listed with 15% discount on the listing day (we gave Avoid IPO recommendation). Now during a bull run, the share price has risen by 70%.

High risk investors who understand all these risk factors can invest in this IPO from medium to long term perspective.

Have you liked our tips and analysis? Then share it on your Facebook, Twitter, Telegram and other social media which might be useful to your friends too.

Suresh KP

Leave a Reply

Your email address will not be published. Required fields are marked *