Jewellery Stocks to BUY: Strong demand is being seen in the jewellery segment under the consumption theme. The dominance of organised players is gradually increasing in this segment.
Recently, a company from this segment, PN Gadgil Jewellers, has been listed in the stock market. Investors gave tremendous love to this IPO.
A domestic analyst has expressed tremendous confidence in Senco Gold Ltd (NSE: SENCO) from this segment. The brokerage believes that this stock looks all set for re-rating.
Senco Gold Share Price Target
Senco Gold Ltd’s stock is currently trading in the range of Rs 1,280.60. 14 months ago in July 2023, the IPO of this company came at Rs 317. Investors who would have invested in the IPO made 4x of their money.
Despite giving multibagger returns, it still has a lot of scope left in it. The domestic analyst has given a big target of Rs 1600 for this.
The stock has given superhit returns of 16.74% in the last month, 22.28% in three months, 81.90% this year so far and 173.31% in the last year.
Senco Gold Is Available Up To 50% Cheaper Than Its Peers
The brokerage said that Senco Gold Ltd is ready for re-rating. Good performance is expected for companies in this segment in Q2.
The management has issued guidance of 18-20% growth which is expected to be achieved. Talking about valuation, it is much cheaper than its peers.
At the present price, it’s trading at a discount of 45 to 55 % to the Titan or Kalyan. It is also trading at a 25% discount to the recently listed PN Gadgil. In such a situation, the valuation comfort is excellent.
Senco Gold Outlook
Senco Gold Ltd opens its stores in tier-1 cities under the strategy. In addition, it’s expanding the franchise model to cities in Tier 2 and Tier 3.
Due to this asset-light model, the return ratio remains better. The RoE of Senco Gold Ltd’s store is 13-14%, while the return on equity of the franchise store is up to 40-50%.
In such a situation, the margin outlook is expected to remain strong. Overall, the outlook of this sector is good. The outlook of this company is also strong.
Quick Fact
| Company name | Senco Gold |
|---|---|
| Stock listing | July 2023 |
| IPO price | ₹317 |
| Current trading | ₹1,280.60 |
| Possible target price | ₹1600 |
| Return (Last Month) | 16.74% |
| Return (Last 3 Months) | 22.28% |
| Return (Year-to-Date) | 81.90% |
| Return (Last Year) | 173.31% |
| Growth guidance | 18-20% |
| Store RoE (tier-1) | 13-14% |
| Franchise RoE | 40-50% |
| Peer discount | 45-55% to Titan, Kalyan |
| PN Gadgil discount | 25% |
| Strategy | Expanding to Tier 2, Tier 3 cities |
| Model type | Asset-light franchise model |
| Sector outlook | Strong |
| Company outlook | Strong |
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