Senco Gold delivered consolidated revenue growth of 27% YoY to INR21.0b (in line) in 3QFY25, with an SSSG of 16%. The growth was driven by strong festive demand, and the healthy demand trend continued into Jan’25. However, the last 7-10 days saw a slowdown due to rising gold prices. We downgrade our rating from Buy to Neutral with a TP of INR400 at 25x Dec’26 EPS. The company opened five stores (+10% Yoy) during the quarter, bringing the total count to 171 stores. It has planned to open 8-10 stores in 4Q, including 5-7 franchisee stores. But there was a significant disappointment on the gross margin front. GM contracted sharply 740bp Yoy to 11.3% (est. 17.7), even after adjusting the custom duty-related inventory loss of INr276m. This occurred despite a stable stud ratio YoY at 10.4%. Hedging-related costs (>INR500m) from rising gold Prices further impacted margins. It led to an EBITDA margin (ex-custom duty impact) contraction of 580bp YoY (est 10.3%, 5.4% in 2Q FY25)
