Senco Gold, a smallcap company engaged in the gems and jewellery sector, will be in focus ahead after the company announced its plans for a stock split and Rs 500 crore worth of qualified institutional placement (QIP). Senco Gold is a 2024 multi-bagger with gains of nearly 102% year-to-date on BSE. There is room to buy in Senco Gold shares.
Senco Gold Share Price:
Last week, on Friday, Senco Gold's share price stood at Rs 1404.45 apiece, down by 0.7% on BSE. The company's market cap was at Rs 10,915.73 crore.
YTD, Senco's share price surged by nearly 102%. While in a year, the stock has advanced by 120%.
Senco Gold Stock Split:
The jewellery company has announced a stock split ratio of 1:2, where 1 existing share having a face value of Rs 10 each was split into 2 smaller shares with a face value of Rs 5 each, fully paid up.
The reason behind the stock split is to improve the liquidity of the equity shares of the company in the capital markets by widening the shareholder base and making it more affordable for retail investors.
Senco plans to complete the stock split action within 3 months from the date of approval of the members of the company, subject to regulatory/ statutory approvals, as may be required.
Senco Gold QIPs:
Also, the company's board of directors have approved the raising of funds by way of issuance of Equity Shares, and/ or securities convertible into Equity Shares at the option of the Company, for an aggregate amount not exceeding Rs 500 crore through Qualified Institutional Placement ("QIP").
Senco Gold BUY/SELL?
Earlier, in September, Emkay Global stated that they see significant re-rating scope for Senco, helped by its expectations of a strong pick-up/SSG outperformance in Q2 and valuation discount vs P N Gadgil (PNG) after its ~70% listing gain.
Furthermore, Emkay's note said, "Our checks suggest a strong pick-up in jewellery retail after a modest Q1, as intermediate cooling of gold prices rushed consumers to stores. In our view, Senco is now comfortably placed to meet or exceed its 18-20% annual growth guidance, despite only 11% growth in Q1. On a trailing basis (FY24 PAT), Senco is trading at a 45-55% discount to Titan/Kalyan and at ~25% discount to P N Gadgil."
On the valuation, Emkay's note said, "Given the strong execution in FY24/H1FY25E and relatively longer listing history, we believe the steep discount is unwarranted. Given the improved medium-term growth profile with a big 900bps duty cut and outperformance vs other retail formats, we are increasing our multiple by 15% to 36x EPS, and reiterating our BUY rating with a revised Sep-25E TP of Rs1,600/sh. Volatility in gross margin is a key downside."
About Senco Gold:
Senco Gold and Diamonds is a brand owned by Senco Gold Limited ('the Company') with a legacy of over 80+ years.
Presently the Company has its presence across 16 Indian states with 150+ showrooms.
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