Senco Gold stock slips 6% on debut day after listing at a premium

• Senco Gold listed at a ₹114 premium to its IPO price on Friday.
• The grey market has been expecting it to list at a 40% premium.
• The IPO had received spectacular response from the investors, as it was subscribed 73x.

Jewellery retailer Senco Gold made its debut on the bourses on Friday at ₹431 a share – that’s a 36% premium over its IPO price. However, within a few hours of the stellar listing, the stock started slipping and by the end of the day, was down by 6%.

However, it’s still trading at a 27.7% premium over its IPO price. The market cap of the Kolkata-based company stood at ₹3,144 crore, as per Bombay Stock Exchange.

The grey market has been expecting it to list at a 40% premium as per media reports. The IPO had received spectacular response from the investors, as it was subscribed 73 times over the shares on offer.

The price band of the offer has been fixed at ₹301-₹317 per equity share. It intends to raise as much as ₹405 crore through the IPO, through sale of equity shares with a face value of ₹10 each.

The company intends to use net proceeds from the fresh issue to fund working capital requirements and towards general corporate purposes.

Senco Gold IPO subscription details
Source: BSE

Attractively priced, say analysts

Senco Gold is a pan-India jewellery retailer, selling jewellery made of gold, diamond, silver, platinum and more. It has 136 showrooms in 96 cities and towns across 13 states in India.

Some of its franchisee showrooms are located in Tier-I towns that provide it greater reach in Tier-II locations, the company says in its red herring prospectus.

An IPO note by SMIFS claims that the IPO is attractively priced, commanding a price to earnings multiple of 13.9x at its upper price band – lower than its peer average.

“Senco is well placed to benefit from the expected growth rate in the industry, and the structural shift from unorganised to organised sector. Company has demonstrated one of the best financial performances among peers,” said SMIFS, giving it a ‘Subscribe’ rating for listing gains.

The company said in its RHP that it’s a very competitive business, and it risks losing a substantial market share. Volatility in the market price of gold and diamonds can affect its income, profitability and scale of operations, it added.

The company has undertaken six criminal proceedings, while it has one such proceeding against itself. There are also 44 tax proceedings against the company. Its promoters have one criminal proceeding against them and four tax proceedings.

“We have been subject to a ‘search and seizure’ operation by the income tax department in the past, which has resulted in taxation and criminal proceedings being initiated against our company and our individual promoter,” the company said in its RHP.

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