Old Gold Exchange Contributes 43% of Sales as Retail Expansion and Robust Same-Store Growth Strengthen FY27 Outlook

Shares of Senco Gold Ltd gained more than 6% during Monday's trading session after the jewellery retailer reported an impressive business update for the first quarter of FY27. Strong revenue growth, healthy same-store sales, rapid store expansion, and robust customer demand lifted investor sentiment, making the stock one of the top gainers in the consumer discretionary space.

The stock opened nearly 4% higher at ₹339.25 on the National Stock Exchange (NSE) and touched an intraday high of ₹348.50. At around 11:00 AM, the stock was trading close to ₹342, up nearly 5% from its previous close, comfortably outperforming the benchmark Nifty 50, which was trading with modest gains.

The positive price action was accompanied by a sharp increase in trading activity. Nearly 2.4 million shares changed hands during the morning session, compared with just 680,000 shares traded in the previous session, reflecting strong institutional and retail participation following the company's encouraging quarterly update.

Strong Q1 Performance Reflects Healthy Consumer Demand

Senco Gold began FY27 on a strong note, reporting an estimated 60% year-on-year growth in standalone revenue during the April-June quarter. The performance highlights the resilience of organised jewellery retailers despite elevated gold prices and an uncertain macroeconomic environment.

The company's retail revenue increased by approximately 48% year-on-year, while same-store sales growth (SSSG) stood at an impressive 38%, indicating strong demand across its existing showroom network.

The healthy growth was supported by wedding-related purchases, festive buying, premium jewellery collections, and increasing customer preference for trusted branded jewellers.

The strong operational performance suggests that organised players continue to gain market share from the unorganised jewellery sector.

Old Gold Exchange Emerges as a Major Growth Driver

One of the standout highlights of the quarter was the growing contribution from Senco Gold's old gold exchange programme.

The company revealed that around 43% of its total quarterly sales came through old gold exchange transactions, under which customers exchanged their existing jewellery for new purchases.

This model has become increasingly popular as rising gold prices encourage customers to upgrade jewellery while limiting additional cash outflows.

The exchange programme not only boosts customer retention but also generates repeat business and supports higher sales volumes even during periods of elevated bullion prices.

Industry experts believe exchange-led demand could continue to remain a key growth catalyst for organised jewellers if gold prices stay near record highs.

Retail Network Continues to Expand Across India

Senco Gold maintained its aggressive expansion strategy during the first quarter by strengthening its nationwide retail presence.

The company opened eight new showrooms during the April-June period, taking its total network to 208 outlets.

The additions included:

• Three Company-Owned Company-Operated (COCO) stores

• Four franchise-operated stores

• One Sennes premium showroom

After accounting for the closure of one outlet, the company achieved a net addition of seven stores during the quarter.

Management remains confident of adding another 12–15 stores over the remaining nine months of FY27, with future expansion expected to focus more on the franchise-led model.

Franchise Expansion to Improve Capital Efficiency

Senco Gold is gradually shifting towards a more asset-light business model by increasing the proportion of franchise-operated outlets.

This strategy is expected to deliver several long-term advantages:

• Lower capital expenditure

• Faster geographical expansion

• Improved return on capital employed

• Reduced operating risks

• Better scalability across emerging markets

The franchise-led expansion model will allow the company to strengthen its presence beyond its traditional strongholds while preserving balance sheet strength.

Margin Pressure Remains a Near-Term Concern

Despite reporting impressive sales growth, Senco Gold cautioned that profitability could face some pressure during the quarter.

The company highlighted two key challenges:

Aggressive Industry Discounting

Several jewellery retailers continue to offer heavy promotional discounts to attract customers, increasing competitive intensity across the organised jewellery sector.

Customs Duty Impact

Changes in customs duties on gold imports could affect procurement costs and temporarily pressure operating margins.

Management indicated that while revenue growth remains strong, these industry dynamics may influence profitability in the near term.

Technical Outlook Remains Positive but Range-Bound

Market analysts believe Senco Gold's technical structure remains constructive despite prolonged consolidation.

According to Hitesh Rathi, Research Analyst at Angel One, the stock has formed multiple bullish technical patterns around its 2023 listing price.

On Point & Figure charts, the stock has registered a 100% bullish pole formation around the ₹235–240 zone, suggesting strong accumulation at lower levels.

However, the stock has remained trapped within a broad trading range over the past year.

Key Technical Levels to Watch

Analysts believe that a decisive breakout above ₹355–360 could trigger fresh buying interest and improve medium-term momentum. Conversely, a sustained decline below ₹325 may lead to increased selling pressure.

Organised Jewellery Sector Continues to Benefit

The latest quarterly performance reinforces the structural growth story of India's organised jewellery industry.

Several factors continue to support long-term demand:

• Rising disposable incomes

• Increasing preference for branded jewellery

• Higher wedding-related spending

• Expanding penetration into Tier-II and Tier-III cities

• Growing acceptance of digital and omnichannel retailing

• Strong customer trust in certified and hallmarked jewellery

Companies with strong brands, efficient supply chains and expanding retail footprints are expected to continue gaining market share over smaller unorganised players.

Growth Strategy Focused on Premiumisation

Apart from expanding its store network, Senco Gold is also focusing on premium product categories and higher-value jewellery collections.

Its premium retail formats, including the Sennes brand, are aimed at attracting affluent consumers seeking designer jewellery and exclusive collections.

Management expects premiumisation, improved product mix and franchise-led expansion to support sustainable revenue growth over the coming years.

Investor Sentiment Strengthens After Business Update

The sharp rally in Senco Gold shares reflects renewed investor confidence in the company's execution capabilities and growth strategy.

The combination of strong revenue growth, impressive same-store sales, expanding retail presence and healthy consumer demand has strengthened expectations of another solid financial year.

Although near-term margin pressures remain a concern, investors appear encouraged by the company's ability to sustain growth even in a high gold price environment.