Senco Gold Q1 FY27: Strong sales, softer margins, and a clear playbook for the festive half

Senco Gold Limited began FY27 with its strongest Q1 revenue performance in recent years, crossing INR 3,000 crore of quarterly revenue. For the quarter ended 30 June 2026, consolidated revenue from operations rose 67% year on year to INR 30,560.3 million, or INR 3,056.0 crore. Retail sales were reported at INR 2,651.5 crore, up 50% year on year, with same store sales growth of 39%.

The topline surge came despite a challenging operating backdrop. Management highlighted that average gold prices increased by about 61% year on year and remained volatile through the quarter. The company also cited Adhik Maas, heat waves, and local disruptions in its core East India markets during May and June. Yet demand remained resilient, supported by Akshaya Tritiya, Poila Boishakh, Baisakhi, Bihu, and the summer wedding season.

Profitability, however, moved in the opposite direction. Consolidated EBITDA grew 16% year on year to INR 2,131.4 million (INR 213.1 crore), but EBITDA margin declined to 7.0% from 10.0% in Q1 FY26. Consolidated PAT came in at INR 1,011.4 million (INR 101.1 crore), down 3% year on year, with PAT margin of 3.3%. Management reiterated that Q1 FY26 had included inventory gains, and that the company’s sustainable operational EBITDA margin range remains 7.5% to 7.8%.

What drove growth in a high-gold-price quarter

A central theme in the management commentary was how customers adapted to elevated gold prices. The company said consumer preference shifted toward lightweight, fancy, daily wear, gifting, and design-led jewellery, alongside a stronger pull for affordability-led offerings.

Diamond jewellery was the most clearly called-out growth vector. Management reported diamond jewellery sales growth of 43% year on year in value and 18% in volume or carats, supported by lower ticket products below INR 50,000, the Everlite range, and a wider 9K and 14K assortment. The company also indicated it was continuously launching new designs to keep the assortment fresh.

The second key lever was old gold exchange. Senco’s 0% deduction exchange campaign supported 43% of total sales quantity in Q1 FY27. Management positioned this as a way for customers to upgrade jewellery while moderating the impact of higher gold prices. This also aligns with Senco’s broader procurement mix, where old gold exchange remains a major sourcing channel.

Finally, store productivity played a major role. The 39% same store sales growth suggests that the existing network delivered significant incremental throughput. The company also reported a 66% footfall conversion rate and an increase in average selling price and average ticket value, implying that higher value per bill combined with healthy conversion supported the topline.

Margin pressure: discounting, gold volatility, and cost mix

While growth was broad based, the quarter’s margin outcome highlighted the sensitivity of jewellery retail profitability to gold price movements, hedging, and customer schemes. Consolidated gross margin declined to 16% from 19% in Q1 FY26. Management attributed the margin movement to several factors: heavy discounting after the customs duty increase, a fall in gold prices within the quarter affecting inventory and hedge outcomes, and the higher share of old gold exchange, which can dilute gross margin.

Costs added to the pressure. Consolidated other expenses rose sharply to INR 1,945.7 million (INR 194.6 crore) from INR 808.8 million (INR 80.9 crore) in Q1 FY26. On the earnings call, management linked the spike to growth-related spends such as store renovations and customer offers, and explicitly said this run rate is quarter-specific and expected to normalize in subsequent quarters.

Finance cost also increased. Consolidated finance cost rose 58% year on year to INR 679.4 million (INR 67.9 crore). Management cited a period of constrained gold metal loan availability around March and April, which forced higher local market procurement and marginally raised blended borrowing cost. In the investor presentation, the company disclosed a Q1 FY27 blended borrowing cost of 7.7% per annum.

Hedging remained a key discussion point. The company described its board policy to hedge around 50% of gold inventory value, using a combination of unfixed gold metal loans and MCX futures and options. On the call, management said it is currently maintaining hedging at around 50% and would like to move toward 75% to 80% as volatility eases, balancing risk management with the liquidity required for growth.

Network expansion and the franchise engine

Senco continued to expand its footprint. The network grew from 201 showrooms at 31 March 2026 to 209 showrooms at 30 June 2026. Management reported net additions of 8 showrooms in Q1 FY27, comprising 3 COCO stores, 4 franchise stores, and 1 Sennes showroom.

The company reiterated that it remains on track to open another 12 to 15 showrooms during the remainder of FY27, with a higher focus on franchise-led expansion and Tier 2 and Tier 3 cities. The investor presentation also highlighted that franchisee stores contribute roughly one-third of revenue and enable asset-light scaling, since franchisees invest in store capex and inventory.

Geographically, the network remains anchored in West Bengal, but the company’s stated strategy is to strengthen both East and non-East markets in a balanced manner. As of 30 June 2026, West Bengal including Kolkata accounted for 109 stores out of 209, while North including Delhi NCR had 25 stores.

Working capital, inventory efficiency, and subsidiaries

Management repeatedly emphasized inventory efficiency. The CFO said the company reduced inventory by about INR 300 crore in the quarter and improved inventory days to around 152 days. This is an important marker for a jewellery retailer, given the working-capital intensity of the category and the volatility in gold prices.

The quarter also reflected a gap between standalone and consolidated profitability. Management said losses at Sennes Fashion and the Dubai entity affected consolidated PAT, while the manufacturing subsidiary supported product development and design throughput. The company described Sennes as being in a growth phase, building its lab-grown diamond, fragrance, and leather-bag businesses.

In terms of demand trend after quarter end, management indicated that July and August were tracking around 25% year on year growth, and about 8% to 10% higher than the May to June monthly run-rate within Q1. Management also reiterated that Q2 is seasonally softer and will be used as a planning and inventory build quarter ahead of the festive and wedding seasons that typically drive Q3 and Q4.

Takeaways for investors

Senco’s Q1 FY27 performance was defined by a sharp split between topline momentum and margin volatility. The company delivered record quarterly revenue, supported by strong same store sales growth, product affordability initiatives, and the old gold exchange engine. At the same time, EBITDA margin fell to 7.0%, reflecting competitive discounting, gold price volatility, hedging outcomes, higher other expenses, and higher finance costs.

For FY27, management retained guidance of 20%+ value growth and 7.5% to 7.8% EBITDA margin, while working toward a sustainable PAT margin of 4.0% to 4.5% and better ROCE outcomes. Execution in the next two quarters will likely be judged on three things that management itself emphasized: normalization of other expenses, improved inventory efficiency, and the ability to hold margins while preparing for the peak festive season demand.