Multibagger Stock: Senco Gold share price jumps over 300% from its IPO price in over 14 months. More steam left?

Multibagger Stock: Senco Gold share price has experienced a 300% surge from its IPO price of ₹317 over the course of a year, providing investors with significant multibagger returns. In a recent report, brokerage house Emkay Global Financial Services Ltd indicated that it anticipates a substantial re-rating potential for this jewellery stock, supported by expectations of robust pick-up/same-store growth (SSG) outperformance in Q2 and a valuation discount compared to P N Gadgil following its approximately 70% listing gain.

Despite only seeing 11% increase in Q1, the brokerage said that, in its opinion, Senco is now well-positioned to reach or surpass its 18–20% annual growth projection. Senco is selling at 45–55% below Titan/Kalyan and about 25% below P N Gadgil on a trailing basis (FY24 PAT).

In light of the robust performance in FY24/H1FY25E and the comparatively extended listing history, the brokerage feels that the substantial discount is not justified. With a significant duty drop of 900 basis points and superior performance over other retail formats, the brokerage is improving its medium-term growth profile and raising its multiple to 36x EPS by 15%.

“We reiterate our BUY rating with a revised Sep-25E target price of ₹1,600 per share. Volatility in gross margin is a key downside,” said Emkay Global in its report.

Senco Gold Q1 Results

Senco Gold Ltd posted a net profit of ₹51.27 crore in the first quarter of the current fiscal year (April-June 2024), showing an 85.4% rise due to increased revenue. The Kolkata-based gold and diamond jewellery chain achieved a 7.5% year-on-year growth in consolidated revenue, reaching ₹1,403.89 crore for the quarter ending on June 30. The company reported that its earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased by 61.8% to ₹108.74 crore during the quarter.

Senco Gold share price

Senco Gold share price today surged by 6.7% to reach a 52-week high, but later the stock remained flat in trading.

“After a positive start, we are seeing some profit booking in this counter along with the broader markets, however, the major trend remains positive and any dip could be considered as a buy with ₹1,200 as support and ₹1,480 as next resistance,” said Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One.

Similarly, Ruchit Jain, Lead Research Analyst at 5paisa, stated that the overall trend for the stock is positive as it has been forming a Higher Top Higher Bottom formation.

Jain also highlighted that the momentum readings are overbought, and hence it is advisable to look for buying opportunities only in corrections. The supports are placed around ₹1,140 and ₹1,050.

Senco Gold Ltd made its debut on the stock exchanges on July 14, 2023, with its shares being listed at ₹430 per share on the NSE, marking a 35.6 percent increase from the issue price. On the BSE, the stock debuted at ₹431 per share. The price band for the issue was set by the company at ₹301 to ₹317 per share.

The final day of the subscription saw a strong positive response from qualified institutional buyers (QIBs), retail investors, and non-institutional investors (NIIs). The retail investor portion was oversubscribed by 16.28 times, QIBs by 190.56 times, and NII portion by 68.44 times. Overall, the total issue was oversubscribed by 77.25 times.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.