Overall, the Senco Gold IPO will consist of a fresh issue, priced at Rs. 325 crores, and up to an offer for sale (OFS) 200 crores. The selling shareholder will be SAIF Partners India IV.
equity shares offered under IPO the face value of 10 each. However, the details including price band, number of equity shares, lot size and duration of the IPO will be revealed in due course.
50% of the IPO size will be reserved for Qualified Institutional Buyers (QIBs), while 35% will be earmarked for retail individual investors (RIIs), and the remaining 15% will be reserved for non-institutional investors (NIIs). ,
Companies like IIFL Securities, Ambit and SBI Capital Markets will act as Book Running Lead Managers (BLRMs) for the IPO.
The net proceeds of the new issue will be used to finance working capital requirements and general corporate purposes. Whereas the proceeds of the offer for sale will be used by the shareholders making the sale.
Further, the company may consider private placement of equity shares for cash return 65 crores. If a pre-IPO placement is done, the amount raised will be deducted from the fresh issue.
Senco Gold has a history of over five decades and is a fourth generation entrepreneur in the jewelery industry. The company was incorporated in August 1994. Since then, the company has emerged as the largest organized jewelery retail player in the eastern region of India by number of stores and jewelery retailers based in eastern India. That said, the company has a wide geographic footprint in non-Eastern states.
Primarily, Senco Gold sells gold and diamond jewelery along with silver, platinum, and jewelery made from precious and semi-precious stones and other metals. Other offerings include costume jewellery, gold and silver coins and utensils made of silver. The products are sold under the tradename “Senko Gold & Diamonds” through multiple channels including their 70 company operated showrooms and 57 franchised showrooms. The company continues to expand its geographic presence and works towards an omnichannel network.
As of today, the company has 127 showrooms with a total area of about 393,342 sq ft in 89 cities and towns across 13 states across India. Some of the company’s franchise showrooms are located in metros and areas other than Tier-I, giving us greater reach in Tier-2 and Tier-3 locations.
Earlier on 7th April, the Company had entered into a Share Purchase Agreement with Oman India Joint Investment Fund Trustee Company, Trustee of Oman India Joint Investment Fund II for issue and subscription of approximately 26,63,541 equity shares. 75 crores.
Among its business strategies, the company plans to expand its presence through a strong and diversified distribution channel. In addition to its regular Senco Gold & Diamonds showroom format, the company also intends to expand with new and future generation showroom formats, which include D’Signia showrooms in areas with comparatively low age to high affluence. and Everlight Showroom.
Senco Gold also focuses on increasing its overall operating margin by adopting an optimal product mix. The company plans to give priority to diamond jewellery, as diamond studded jewelery generally involves higher gross margin than gold jewelery as per a Crisil report. In the fiscal years 2019, 2020, 2021 and in the eight months ended November 2021, sales of diamonds and precious/semi-precious stones represented 5.62%, 6.13%, 5.06% and 4.84%, respectively, of revenue from the Company’s operations.
Also, the company will continue to invest in marketing and brand building initiatives through a hyperlocal strategy. Recognizes that effective marketing is critical to future revenue growth,
Enhancing the visibility of our brand, establishing relationships with target customers and selling products in a competitive cost effective manner.
As of January 31, 2022, the company has implemented a loyalty program with over 630,000 active customers.
Additionally, to meet the changing needs of consumers, especially the younger generation, the company may explore jewelery complementary products in the business of luxury and lifestyle such as perfumes and bags.
Another strategy of the company is to grow its business through digital platform and leverage its manufacturing capability on creation of asset light sales channel, thereby offering a seamless combination of both offline and online shopping options to the customers.
Senco Gold’s revenue from operations has grown at a CAGR of 9.92% from FY 2020 to FY 2021, while its profit for the year has decelerated at a CAGR of 32.39% from FY 2020 to FY 2021.
The demand for gold jewelery is expected to improve in terms of volume in the next five years.
Senco Gold in its draft highlighted that low base, muted demand, expected reduction in gold prices and more weddings are likely to boost demand for jewelery in the near future. In the long term, improving economic growth (estimated 7-8% annual real GDP growth over the next five years), mitigating short-term disruptions due to COVID-19, increasing urbanization and increasing levels of disposable income will drive growth. Help is expected. The formulation of a comprehensive gold policy, which was announced during the Union Budget 2018-19, and mandatory hallmarking is also expected to be positive for the industry, especially for organized players in the long run.
CRISIL Research expects gold consumption demand to grow at a CAGR of 13-15% over the next five years. Demand is likely to be affected by inflation and geopolitical events.
Senco Gold will compete against major players like Kalyan Jewelers India and Titan Company on the stock exchanges post the IPO. As per the draft, Senco Gold’s EPS is slim 9.25 per share as of March 2021, while Kalyan Jewelers and Titan have diluted EPS (-0.07) and 10.96 respectively. Senco’s Return on Net Worth (RoNW) is 10.65%, while that of Kalyan is -0.25% and Titan’s is 13.74%. NAV per equity share is 90.64 on Senco Vs Kalyan and Titan who have NAV 27.44 more 84.45 per equity share.