This stock has zoomed 387% over issue price; plans fundraising, stock split

Senco Gold share: Currently, the stock of the gems and jewellery company is trading 387 per cent higher than the Senco Gold IPO issue price

Senco Gold (Senco) share hit a new high of Rs 1,542.95 on the BSE on Tuesday, surging 8 per cent in the intraday trade, after Senco Gold and Diamond Company said that its board will meet on Friday, October 4, to consider a fundraising plan. 

The board of Senco Gold will also consider sub-division of face value of equity shares of the company from Rs 10 to lower denomination.

In the past one month, Senco Gold share price has rallied 33 per cent as compared to 2.3 per cent rise in the BSE Sensex. Thus far in the calendar year 2024 (CYTD-24), Senco Gold share has zoomed 122 per cent as against a near 17-per cent rally in the benchmark index. 

 

Currently, the stock of the gems and jewellery company is trading 387 per cent higher than the Senco Gold IPO issue price of Rs 317 per share. Senco Gold made its stock market debut on July 14, 2023.

"A meeting of the board of directors of the company is scheduled to be held on Friday, October 4, 2024 to consider and approve the proposal of raising funds by issuance of equity shares, by way of preferential issue, private placement or qualified institutional placement or any other permissible method as the board may deem appropriate," Senco Gold said in its stock exchange filing.

The company further said the board will consider the proposal for alteration in the share capital of the company by way of sub-division/ split of the existing equity shares of the face value Rs 10 each in such manner as may be determined by the board of directors subject to approval of the shareholders and any regulatory/ statutory approvals.

Most companies opt for a stock-split after a sharp surge in their market price with a view to enhance the liquidity of the company's equity shares and to encourage participation from retail investors by making equity shares of the company more affordable.

Fundamentally, Senco Gold offers a range of jewellery, including gold, diamond, silver, platinum, as well as precious and semi-precious stones. Senco's brand portfolio includes 'Everlite', focused on lightweight jewellery; 'Gossip', the silver and costume jewellery brand; and 'Aham', catering to men. 

The company also has 'Vivaha' and 'Rajwada' collections, which are premium wedding jewellery range. Senco is one of the largest organised jewellery retailers in eastern India.

Analysts at Emkay Global Financial Services, in a recent company report,  said that its channel checks suggest a strong pick-up in jewellery retail after a modest Q1, as intermediate cooling of gold prices rushed consumers to stores. 

In its brokerage view report, Emkay Global said Senco Gold is now comfortably placed to meet or exceed its 18-20 per cent annual growth guidance, despite only 11 per cent growth in Q1.

"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 per cent to 36x EPS," analysts had said. 

Senco Gold share is, however, trading above the brokerage firm's September 2025 target price of Rs 1,600 per share. Volatility in gross margin is a key downside, it said.

Meanwhile, looking ahead to 2024-2025, Senco Gold anticipates a year of growth and opportunity, underpinned by favourable market conditions and a strategic emphasis on innovation and sustainability. 

"The jewellery markets, both globally and in India, are expected to continue their growth, driven by rising disposable incomes, increasing fashion awareness, and the enduring cultural significance of jewellery in Indian society. This positive environment provides a strong foundation for the Company to expand its market share and explore new growth avenues," Senco Gold said in its FY24 annual report.