Despite gold price volatility, jewellery retailer Senco Gold expects its gross margin for the current financial year to be “more normalised” in the range of 16-17 per cent.

During an earnings conference call, Managing Director & CEO Suvankar Sen said for the first half of this fiscal the company’s gross margin stood at around 15 per cent after the margin took a hit in the second quarter following the government’s move to reduce customs duty on gold to 6 per cent. Union Finance Minister Nirmala Sitharaman proposed to reduce the customs duties on gold, silver and platinum on July 23 while presenting the Budget for 2024-25.

“What has happened in this particular H1 (first half of FY25) is, if you note that, in Q1 our gross margins went up. In Q2 our gross margin has taken a hit because of the duty cut. But this year, in this particular H1, our gross margin is in the range of 15 per cent. And I think that in H2 (second half), with the price volatility, our gross margin will be in that same range overall,” Sen said during conference call after declaring the second quarter results.

“In the year we take a gross margin of 16 per cent to 17 per cent. So, therefore, I think there will be a more of a normalised gross margin for this particular year. Certain quarters give us a higher number. Certain quarters will take away the numbers from you,” he said.

The company’s gross margin stood at 15.3 per cent for the last financial year.

Senco Gold’s net profit remained almost flat at ₹12.12 crore for the second quarter of FY25 compared to ₹11.94 crore for the same period of FY24. Revenue from operations, however, grew 31 per cent year-on-year at ₹1500.49 crore during the July-September quarter.

Sen said following the customs duty cut gold prices fell and that led to a “very positive result” on the overall sales for the jewellery industry and for the company. There were a lot of rural demands coming from tier 2,3,4 towns and cities due to the price coming down.

The company crossed ₹1000-crore sales during October, as Navratri, Diwali and Dhanteras were all in the same month. From last festive season to this festive season, it saw a sales growth of about 14-15 per cent y-o-y. In terms of volume, the growth was lower single digit.

“The wedding season is about to start. Gold prices are on a downward trend, which I would feel that will only encourage consumers to come and buy for the upcoming wedding season. For the year (FY25), we are looking at around 18 per cent growth year-on-year,” the MD added.

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