Senco Gold Share News: Following investors’ negative reaction to the company’s figures (December quarter), shares of Senco Gold, a prominent jewelry retailer in India, fell 19% in early morning trading today, February 14, hitting a 9-month low of ₹363.75 per share. Let’s learn everything related to Senco Gold Share News.
Brief Background of Senco Gold Private Limited
With a history spanning more than 85 years, Senco Gold & Diamonds Limited (also known as “the Company”) is the owner of the Senco Gold brand. On August 22, 1994, the firm was established in Kolkata, West Bengal, as Senco Gold Pvt. Ltd., in accordance with the 1956 Companies Act. Later, in August 2007, the company changed its name to Senco Gold Limited and became a public limited company in order to grow its jewelry business operations. From the time the company got listed, Senco Gold share news has been the hot topic for many analysts all around the world.
Reasons Behind the Fall: Senco Gold Share News
Since the Senco Gold share news came to light, there have been several assumptions regarding the reasons behind the price fall. Let us see all the reasons behind the fall of Senco Gold’s share price.
Reason 1: Expenses Due to New Subsidiaries
The EBITDA margin of Senco Gold fell to 3.8 per cent in Q3, a dramatic reduction from the 11 per cent it recorded in the same quarter last year, as a result of significant expenses related to the establishment of new subsidiaries.
As compared to the quarter similar to last fiscal year, the management claims that the impact of customs duties during the previous two quarters and the general volatility of the gold price are the main causes of the margin discrepancy. In the past, the business had predicted that its EBITDA margins would be between 7 and 8 percent.
Reason 2: Slow Operational Performance
Senco Gold’s bottom line was also negatively impacted by the slow operational performance; net profit fell to ₹ 33.5 crore from ₹ 101.3 crore in the single quarter of the previous fiscal year. With the long-term growth potential of the Indian jewelry, gems sector as a driving force, Senco Gold’s CFO, Sanjay Banka, expressed confidence in reaching an annualized EBITDA margin of 7-8 percent, barring any one-time events.
Reason 3: Gold Price Volatility
In Q3, gold prices saw significant fluctuation, rising 22% year over year and 20% since April 2024. The management said that despite this, customer demand was still high and that the Q2 customs duty cut helped Q3 sales, especially during festivals. It was challenging for the business to forecast their future earnings and profitability as the gold prices are unstable.
Conclusion
A number of issues, including decreased profitability, pressure on margins, the impact of customs duties, and unfavorable market sentiment toward small-cap stocks, are contributing to the rollout of Senco Gold share news. No matter what the news says, in the fourth quarter, the business anticipates achieving an EBITDA margin of 7-8%.
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