Senco Gold's Rs 405-crore IPO hits Street; should you subscribe?

Jewellery retailer Senco Gold launched an initial public offer (IPO) estimated to be worth up to Rs 405 crore on Tuesday, July 4. The IPO comprises fresh issuance of shares up to Rs 270 crore and an offer for sale (OFS) worth Rs 135 crore by promoters and existing shareholders. The bidding process will conclude on July 6. 

EDITOR'S TAKE | How market wizard Anil Singhvi views the Senco Gold IPO

Zee Business Managing Editor Anil Singhvi recommends applying for the Senco Gold IPO for listing gains as well as for the long term. He has identified the following set of key points about Senco Gold: 

Positive:

• Strong background of promoters and PE investors
• Healthy growth trend
• Impressive financial track record
• Attractive valuation

Negative

• Highly competitive business
• Heavy concentration in eastern India
• Debt increased from Rs 530 crore to Rs 1,177 crore in two years

What analysts say

 Most analysts have a positive view on the Senco Gold IPO. Nirmal Bang also recommends subscribing to the issue for listing gains. 

"Senco Gold has positioned well in the eastern India and other non-eastern regions with its legacy of the last five decades. It has delivered 24 per cent revenue growth over FY21-23 with margin improvement from 6.6 per cent in FY21 to 7.8 per cent in FY23. Although the company has staged a decent performance in terms of profitability amongst its peers, it has observed challenges generating positive operating cash flow during the last two years... The IPO is issued at a 15.5x PE valuation based on its FY23 EPS which is at a discount relative to the average PE valuation of its peers," according to the brokerage. 

Senco Gold IPO: Key things to know

Important dates: The bidding process, which began on July 4, will end on July 6. Here's a list of tentative dates for the IPO:

• Basis of allotment: July 11
• Initiation of refunds: July 12 
• Credit of shares: July 13 
• Listing date: July 14 

Issue price: Potential investors will be able to bid for Senco Gold shares under the IPO at Rs 301-317 apiece. 

Lot size: Bidding will be available in multiples of 47 shares, translating to Rs 14,147-14,899 per lot.   

Listing: Senco Gold shares will be listed on bourses BSE and NSE. 

Financials: The company registered an adjusted net profit of Rs 158 crore for the financial year 2022-23, marking growth of 22.5 per cent compared with the corresponding period a year ago. Its revenue came in at Rs 4,077 crore for the year ended March 2023 as against Rs 3,535 crore for the previous year. 

Senco Gold's EBITDA margin remained steady at 7.8 per cent for FY23 on a year-on-year basis. 

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