Senco Gold and Diamonds Q4 FY26: Record revenue, but watch the working capital

Senco Gold and Diamonds ended FY26 with its highest ever consolidated revenue from operations of Rs 8,430 crore, up 33% year on year. Q4 FY26 revenue rose 45% to Rs 1,997 crore. Profitability also surged, with FY26 EBITDA at Rs 969 crore and PAT at Rs 574 crore. In Q4, EBITDA was Rs 274 crore and PAT was Rs 157 crore.

The headline margins were unusually high. FY26 EBITDA margin came in at 11.5% and Q4 EBITDA margin at 13.7%. Management made a clear distinction between these reported numbers and what it believes is sustainable. The company reiterated a long-term EBITDA margin guidance of 7.5% to 7.8%, noting that FY26 margins were lifted by gains arising from the rise in gold, silver and platinum prices, along with product mix and making charge benefits on higher price points.

Two operating themes ran through both the investor presentation and the earnings call. First, consumers stayed resilient in value terms despite extreme gold price volatility, helped by a well-distributed wedding season across the quarter. Second, Senco leaned heavily on its Old Gold Exchange program, which management said contributed about 50% of Q4 revenue and 44% of FY26 revenue.

A quarter shaped by gold prices, weddings, and exchange-led affordability

Q4 FY26 was marked by sharp price swings in gold and silver. Management highlighted that international prices moved from a peak near USD 5,595 per ounce to around USD 4,500 per ounce within days, while the domestic average gold price was about Rs 1,51,783 per 10 grams, up 79% year on year and 20% quarter on quarter.

In this environment, the company maintained hedging at around 40% to 50% to balance volatility risk with liquidity risk from margin calls. It also pushed affordability levers. Management described a gradual shift toward lightweight jewellery and lower caratage, and highlighted its 9K and 14K portfolio as a way to attract younger and more budget-conscious consumers.

Operationally, the company reported same-store sales growth of about 35% in Q4 and about 24% for FY26. FY26 SSSG was described as contributing roughly 70% of the full-year growth.

Financial snapshot: strong reported margins, but not all repeatable

The company’s consolidated numbers for Q4 and FY26 are summarised below.

A key message from management was that a portion of FY26 profitability was driven by price-led inventory gains. During the concall, the CFO indicated that roughly 2.5% to 3.0% of margin uplift could be attributed to the rise in precious metal prices, with the remainder supported by mix, premiumisation and making charges on higher price levels. Even after this explanation, management chose to keep FY27 EBITDA guidance at 7.5% to 7.8%, citing the dynamic competitive environment and uncertainty in demand.

Network expansion continues, with franchise-led growth as the anchor

Senco ended March 2026 with 201 showrooms, including 102 company operated stores, 85 franchisee stores, 12 Sennes stores, and 2 showrooms in Dubai. In FY26, it launched 26 showrooms, and in Q4 it launched 7.

The company’s operating model places meaningful emphasis on franchise expansion. In its description of FOFO and FOCO models, Senco noted that franchisees fund store capex and working capital for inventory, while Senco provides systems, brand, training, and operating support. This model is positioned as a way to penetrate Tier 3 and Tier 4 markets and improve capital efficiency.

For FY27, management guided to 18 to 20 store openings, with a stronger push toward franchise rollouts. The concall also indicated a geographic prioritisation, with roughly 50% to 60% focus on East India and about 30% to 40% toward North and Central India.

Working capital is the key risk investors must track

The trade-off for growth in jewellery retail is usually inventory, and FY26 was no exception. Consolidated inventory increased 61% year on year to Rs 5,296 crore. Inventory days increased to about 186 days, and the cash conversion cycle rose to 170 days in FY26.

The cash flow statement highlights the impact. Operating profit before working capital changes rose to Rs 1,028 crore, but working capital consumed cash. The company reported net cash used in operating activities of about Rs 789 crore in FY26, driven largely by inventory build.

Management attributed the inventory rise to three factors: elevated gold prices inflating inventory value, inventory for new showrooms, and additional stocking ahead of key demand periods such as Akshaya Tritiya. In the concall, management suggested that inventory days around 150 to 160 is a good benchmark, while the CFO indicated a target range of 160 to 180 days, noting that jewellery peers can run even higher.

Old Gold Exchange becomes a structural lever, not a campaign

One of the most important changes in the business model is the scale of Old Gold Exchange. Management said it reached about 50% of revenue in Q4 and 44% for FY26, up from about 25% to 30% a few years earlier.

The company expects this to remain around 50% to 55% going forward. Management also stated that it does not see a direct negative impact on margins at present, as it is not charging customers melting losses in the exchange process. The operational challenge, as acknowledged on the concall, is to mobilise and recycle old gold faster so it can be manufactured and replenished efficiently.

Sennes and digital platforms add optionality, though disclosures are limited

Senco continues to broaden its reach beyond traditional jewellery retail. The presentation described digital platforms including My Digi Gold and My Digi Silver, and reported registrations and downloads as of March 2026. It also reported 119% year-on-year growth in digital sales, about 10.57 million website visits, and around 32,700 e-commerce orders fulfilled in FY26.

On the newer Sennes brand, management positioned it as a long-term initiative for younger consumers, spanning lab-grown diamonds and lifestyle categories such as fragrances and leather goods. The CFO stated that the Sennes business is EBITDA positive at the brand level in its second year. However, revenue contribution was not disclosed, so investors cannot yet independently measure its scale.

FY27 guidance: steady growth, normalized margins, and tighter inventory discipline

For FY27, management guided to 18% to 20% value growth, sustainable EBITDA margins of 7.5% to 7.8%, and sustainable PAT margins of 4.0% to 4.5%. It also reiterated an intent to improve borrowing costs through a higher share of gold metal loans, while acknowledging short-term volatility can temporarily disrupt the mix.

The company also discussed the impact of a customs duty hike from 6% to 15%. Management indicated the resulting gain may flow through as inventory is sold over subsequent quarters. At the same time, it flagged that a future duty reduction could reverse these gains and that fully hedging such risk through derivatives is difficult when exchange margin requirements are elevated.

The core investor takeaway from Q4 and FY26 is that Senco is executing strongly on network expansion and customer acquisition, with Old Gold Exchange emerging as a powerful affordability engine. But the company remains working-capital intensive, and reported profitability in FY26 includes price-linked gains that management itself does not consider sustainable. FY27 will be a test of how well Senco can grow with normalized margins, improve inventory days, and reduce the gap between reported profits and cash generation.