Senco Gold IPO: Check IPO Date, Price Band, GMP And Analysis On Whether You Should Subscribe

The three-day initial public offering (IPO) of Senco Gold will open for subscription from July 4. The public issue will remain open for subscription till July 6. 

The company has set the price band in the range of Rs 301-317 per share. Willing investors can subscribe to at least one lot of 47 equity shares and in multiple of 47 shares. The company is eyeing to raise Rs 405 crore from its primary stake sale.

The offer includes a fresh equity issue of roughly Rs 270 crore and an offer for sale (OFS) of up to Rs 135 crore. SAIF Partners India IV will offload shares worth Rs 135 crore through the OFS route. Almost half of the offer is reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and 35% for retail investors (RIIs).

The net proceeds of the Fresh Issue will be utilized towards funding the working capital requirement of the Company which is estimated to be Rs 1,960 million and the balance amount towards general corporate purposes. 

GMP of Senco Gold

As of June 30, Senco Gold IPO GMP or grey market premium was Rs 60. The shares of Senco Gold traded at a premium of Rs 60 in the grey market, according to market observers.

About the company:

Originally incorporated as Senco Gold Private Limited on August 22, 1994, Senco Gold is a pan-India jewellery retailer, which sells its products under its brand name 'Senco Gold & Diamonds' through its 130+ showrooms across 96 cities and towns in the country. The company has a strong brand name with a legacy of over five decades and is a popular jewellery brand. For the financial year ending March 2023, the company's total income was Rs 4,108 crore, while profit came stood at Rs 158 crore.

Things you should consider before investing in Senco Gold IPO:

Heavy dependency on sale of gold jewellery for revenue

The company hugely depends on the sale of gold jewellery for revenues. Sale of gold jewellery accounted for 89.69%, 91.53% and 91.90% of the company’s total revenue from operations for fiscals 2023, 2022 and 2021, respectively. 

Since the company is solely dependent on the sale of gold jewellery for its revenue, its business and financial conditions may be negatively impacted in case there are any issues related to the procurement of gold or the sale of gold jewellery.

Price volatility and other factors

The price volatility of gold and diamonds can have a huge impact on the value of the company's inventory and can affect its income, profitability and scale of operations.

In addition, there are various regulatory concerns as the company obtains gold on a loan basis, mainly from bullion banks which is subject to RBI regulations. So, any adverse change in RBI regulations governing gold on a loan basis can impact the company’s business.

Last but not least is the cutthroat competition in the Indian jewellery market. Senco’s listed competitors in the market include Titan Company Ltd and Kalyan Jewellers India.