Senco Gold Ltd. (NSE: SENCO) Q2 2025 Earnings Call dated Nov. 14, 2024
Corporate Participants:
Suvankar Sen — Managing Director and Chief Executive Officer
Sanjay Banka — Chief Financial Officer
Analysts:
Devanshu Bansal — Analyst
Raj Sarraf — Analyst
Videesha Sheth — Analyst
Yash — Analyst
Deepak Lalwani — Analyst
Dhiraj Mistry — Analyst
Shirish Pardeshi — Analyst
Vikrant Kashyap — Analyst
Gaurav Gandhi — Analyst
Presentation:
Operator
Ladies and gentlemen, welcome to the Q2 and H1 FY25 Results Conference Call of Senco Gold Limited hosted by Emkay Global Financial Services. [Operator Instructions]
I now hand the conference over to Mr. Devanshu Bansal from Emkay Global Financial Services. Thank you, and over to you Mr. Bansal.
Devanshu Bansal — Analyst
Hi, good morning, everyone. I would like to welcome the management team of Senco Gold and thank them for this opportunity.
We have with us today Suvankar Sen, Managing Director and Chief Executive Officer; and Sanjay Banka, Chief Financial Officer.
I shall now hand over the call to the management for the opening remarks. Over to you, sir.
Suvankar Sen — Managing Director and Chief Executive Officer
Yes, good morning, everyone. Good to talk to and meet all of you over the call. We are here today to talk about the Q2 performance of FY24, FY25 and also the overall H1 performance for Senco Gold Limited.
Before I get into the numbers, I would just like to kind of bring to your attention on the way the Q2, which is July, August, September has been. So towards the end of July, we have seen a kind of an incident which was the budget. And it was the good initiative of the government to reduce the duty on gold price to — 9% to 10% duty, and that fall in gold price led to a very positive result on the overall sales for the industry as well as for us at the Company.
So that was one of the triggering points for the month of July. If you look at August, August was, I would say, it was kind of a mini Dhanteras. Usually, Q2 is a quarter which is comparatively slower and lower than the rest of the quarters in the year, but this time, we have seen that Q2 numbers in terms of top line has been a higher number compared to Q1 itself. So Q1 was a quarter for Akshaya Tritiya and New Year’s in many states. But maybe it was the election, the heat wave for which inspite of the growth, a lot of the sales passed on to Q2 and especially with the duty cut happening and the prices coming down.
And then as we ended August and we moved into September, we saw that it was a full focus on the preparation for the Diwali and Dhanteras and Navratri season. And on the other hand, we saw that the gold prices were moving towards all-time high in the month of September. So while the planning for the festive season was full on, but these price volatilities that happened during this particular quarter did act as a little bit of, I would say, hindrances for which we had to go ahead and take more gold loans and arrange funds and arrange for the — stocks for the festive season. But all in all, coming to the numbers if we look at it, we have registered a 27% growth in Q2. And if you want to break it up, you will see that the value growth overall in gold was about 30% and in diamond, it was about 9%.
And in terms of volume, we always tell that when the gold prices move up, then we see value growth but we usually see a volume degrowth. But we have seen that — as far as gold was concerned, we have seen a volume growth of 7% and in diamond, we have seen a volume degrowth of 3%. Now that behavior of consumers that we saw was that when gold was on an upward trend, people who had to buy thought that it is better to buy gold than buy diamonds and diamond prices were also under pressure. So that is where we could see that there was an inherent demand for consumers to buy gold, maybe for their weddings, maybe for their self-investment, but that was the scenario.
And if we look at the overall H1 of this particular year compared to the previous year, we have seen a 17% growth overall. And here, if we look at it, the volume growth for H1 overall for gold was only 1%. In diamond, we have seen a volume degrowth of 8% and a value growth in gold for H1 compared to last year was 22% and a value growth of — in diamond of 3%. So such is one scenario that we need to take care of.
The second part is that here — while Mr. Banka will take you more through the numbers, what I would like to just keep guide you all is that whatever numbers in terms of EBITDA and PAT that we see, you must consider that the duty cut that was impacted and we had discussed on it before as well is approximately INR27 crore to INR30 crore of that duty impact has also been taken into account in the quarter two results. So that is something that we must keep in mind. It was a onetime impact, which we will be taking over the quarter two, quarter three or quarter four maybe. And that — but other than that, whatever growth, whatever numbers we see is we keep taking that into account as well.
Now when we speak of diamond and the initiatives that we have taken in terms of launching new collections, we launched the wedding collection, we have been in the middle of Independence Day, the festive sales and various kinds of such initiatives were taken to make sure that our diamond sales go up. So in terms of ATV/ASP, we will see that we have grown by about 12%. So that was led by the increase in gold prices and led by the fact that consumers’ budget was up in — for this particular season.
And in terms of number of invoices also, we have seen that there has been a 12% growth in terms of number of invoices. One thing that kept this industry growing against the other sectors is the old gold exchange. And we have seen that there has been a 34% increase in terms of the use of old gold by the consumers. When the gold prices go up, consumers feel that the old gold line in their houses are something that must be utilized.
And I think through our policies of ensuring that the customer do not lose out anything when they will bring their old gold not only from Senco, but from other jewellers that family jewellers that they have bought as well. And I think that is giving a lot of encouragement for the consumers to come and buy and exchange their old gold. And out of the old gold that was exchanged, we must say that 62% of the old gold that we received continues to be a non-Senco old gold.
So this is a signal that, yes, a lot of shift from the unorganized to organized continues to happen in the current scenario. If we look at the way forward, Dhanteras month is something that we all faced in the month of October. There was Navratri, there was Dhanteras. And I must — I’m very happy to tell all of you that this October month, we have done the best-ever sales for Senco in the history of Senco. So we crossed INR1,000 crore sales for the month of October with Navratri and Diwali, Dhanteras all being in that same particular month.
And we are very positive that, yes, the wedding season is about to start. We have already seen in the post Dhanteras also, with the geopolitical situation, and the way the U.S. markets are behaving, the 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 more. So yes, while at one end, in terms of the estimates and the thought processes on what kind of growth we are looking for the year, we are looking at around approximately an 18% growth year-on-year. The gold prices have been on an upward trend, but let us assume an 18% growth year-on-year in terms of top line. In terms of bottom line, our endeavor from the very beginning was to grow about 15% to 18%, but we just need to keep in mind that this onetime loss for the duty of INR50 crores to INR60 crores is there.
We are taking all kinds of initiatives, how we can control cost and how we can increase the sales of diamond. But if you look at the Q2, the diamond growth has not been that much, but we continue to bring out new designs, new collections and marketing campaign. We’ve done a lot from September itself, launching our Aparupa collections, men’s jewelry. We are happy to inform all of you that now along with the fact that we have Vidya Balan and Kiara Advani as our National brand ambassador, we wanted to focus on men’s jewelry in a big way and we’ve brought in Kartik Aaryan as the brand ambassador for men’s jewelry, targeting the younger crowd and the younger generation. It’s a new segment. It’s been last three years, four years, we wanted to always focus on men’s jewelry as a category, which is about 15% [Phonetic] of the overall sales, and I think that we need to look at the future, look at the new generation consumer and with the movies that are coming out and the movies that are getting successful, I think it will have a positive impact as we keep continue to grow all over the country. And in terms of store openings, one must agree that we have opened one Senco Company-owned Company-operated store. We have opened about four Sennes stores, focusing on the lab-grown diamond jewelry and leather accessories. This particular coming quarter, we will be launching our perfumes range under the Sennes brand also. And franchisees, we’ve opened two franchisees. There are more in the pipeline.
So — but — while the new franchisees getting added were this particular quarter lower, what we must share with you that in terms of the Q2 growth that we have seen, franchisee growth with the existing franchisees that is there has played a very big role in the overall growth of the business. So be it in terms of diamond sales growth we talk about, in terms of gold jewelry sales growth we talk about, the primary sale to franchisee and the secondary scale that we saw the franchisees getting from their markets, which is usually the Tier 2, Tier 3, Tier 4 towns and cities has been the one which has actually driven the Q2 growth for Senco Gold Limited.
So now I will request Mr. Banka to take you through the numbers and further we are there then to take queries.
Sanjay Banka — Chief Financial Officer
Yes, sir. So thank you very much, sir. A very detailed background has been given and it is a result of these excellent initiatives that the business has taken that they have transformed into good numbers. So as you’ve said that the retail business in the quarter had — grew by 27% and 19% in H1. So let me give the consolidated results first. So for H1, being — including that of Q1. So the top line grew by 18.5% from INR2,452 crores last year to INR2,904 crores comparing Y-o-Y H1. The EBITDA Y-o-Y grew from INR106.7 crores last year in H1 to INR160.7 crores this year, almost a 50% improvement. Similarly, the PAT, which in H1 last year was INR39.6 crores has grown to INR63.4 crores, a 60% improvement.
And this is despite the fact that we have taken impact of around INR29.83 crores on account of custom duty. So our total impact is likely to be around INR58 crores to INR60 crores. So now that INR29.83 crores has come in quarter one, balance amount will — impact will come in quarter three, that is H2. So this is on account of Y-o-Y consolidated. If we look at standalone number for quarter two, they have also improved very significantly from INR1,157 crores in Q2 last year to INR1,515 crores in Q2 this year, indicating a 30% improvement. And similarly PAT, which was last year small sum of INR10.6 crores in Q2 has improved to INR14.2 crores, a 33% improvement. So overall, the financials are reflective of the various initiatives which we have taken.
Now if we talk about the balance sheet, which we have shared, the balance sheet is also becoming stronger and as the business has grown. So particularly the balance sheet of the Company for September and March, they are prepared ahead of the festive season. So the 30th September balance sheet is prepared ahead of the requirement for festive season that is Dhanteras. So our balance sheet primarily has seen movement of borrowing. So the borrowing has increased by INR238 crores, but a major part of this increase is on account of gold price rise as well. So versus last quarter and this quarter, the gold price last quarter rose at INR7,158, and this quarter rose at INR7,486, almost a 4% to 5% increase. So that leads to increase in the gold metal loan mark-to-market pricing and leads to improved increase in the borrowing.
Secondly, there is also increase in trade payable. So this is on account of the festive readiness. And this two increases and movement in the balance sheet has primarily been on account of inventory, which has increased by almost INR301 crores. So that’s on account of P&L and balance sheet. And as you’ve said about the hedging, we have said that our hedging policy is — talks about a minimum of 50% hedging, while we have said that we will keep hedging around 80% of — 80% plus. So as far as this quarter is concerned, our hedging was almost 85% as we ended the quarter.
So with that, I think we can open the floor for question-and-answer and we can address your queries. Thank you very much for joining this call.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Raj Sarraf [Phonetic] from Finvestors. Please go ahead.
Raj Sarraf
So very good morning, sir. Sir, I’m audible?
Operator
Yes, sir. Please proceed.
Raj Sarraf
Yeah. Sir, as you can see a healthy growth in top line, but EBITDA and PAT took a hit. As you mentioned in the opening remarks that duty cut impacted EBITDA by INR29.83 crores this quarter. So you also mentioned that the balance INR30 crores will be in Q3. So no impact in Q4, sir? Am I listening it correct?
Sanjay Banka
So your understanding is correct. So as you know this impact is based upon the inventory turn. So let’s say that 2,500 kg of 2,800 kg of gold that will not – that could not have got sold in the Q3 itself. So ideally, the impact should come within Q3 itself, that is what we can say. There maybe very small carryover in Q4, but overall impact will come in this year itself. So in March ’25, the impact will definitely come.
Raj Sarraf
So the total impact, the leftover impact is INR30 crores, sir in this year?
Sanjay Banka
Yeah, yeah, maximum, correct.
Raj Sarraf
Yeah. Yeah. And sir, as you said, we already have north of INR100 crores sales in October, which is 60% of the last year Q3, sir. Now having very good season — wedding season ahead, yeah, are we not being very conservative in guiding for 18% for the entire year, sir? Are we not seeing any growth in Q4 if we are saying 18%?
Suvankar Sen
No, October has been a very positive month. After Diwali, Dhanteras, usually we have a seven days, 10 days of lull, but now the wedding season is in full force. So I think from our perspective, while in our minds, we want to be as positive and aggressive, but as we come closer to the year, we would rather have a conservative approach and then perform — try to perform better than what we are estimating. So yes, INR1,000 crores has been a great quarter. But last year — if again to add to that, let me give you another picture and it is for everyone that last year Dhanteras was in November, 10th of November, 11th of November. So if we look at the overall scenario YTD, then we will see that our growth is around 15% to 18%. So I think it’s fair and to take a 18% approach and then keep working towards achieving trying to achieve more.
Operator
Mr. Sarraf, I would request you to kindly rejoin the queue for follow-up questions, please. There are others waiting. Thank you. The next question is from the line of Videesha Sheth from Ambit Capital. Please go ahead.
Videesha Sheth
Hi. Thank you. Am I audible?
Operator
Yes, ma’am, please.
Suvankar Sen
Yeah.
Videesha Sheth
Yeah. Hi. Thank you for the opportunity. Just wanted to clarify that given we’ve seen around INR10 billion odd sales in the month of October. Would it be fair to say that we would have seen a 20% SSG when we compare this year’s festive versus last year’s festive?
Suvankar Sen
The SSG numbers…
Sanjay Banka
See, Videesha, the SSG number, what we have said is that it’s usually around 60% to 70% of total growth. So even for H1, when we are talking about around 19% growth — 20% growth, SSG around 12% to 13%. So similar trend will prevail in H2 and in quarter three or quarter four.
Suvankar Sen
So just what Mr. Banka said is Q2 SSG is 20%, H1 SSG is 12%.
Sanjay Banka
Correct.
Suvankar Sen
So for the month of October, the SSG will be in the range of 12% to 15%, if…
Sanjay Banka
For Q3.
Suvankar Sen
For Q3 for — yeah, for October, November, yeah, for Q3, will be in that particular range. Yes.
Videesha Sheth
Got it. Got it. Yeah. And the second question was on gross margins. How should we look at the GM movement as the studded component has not materially changed and plus last quarter, you had highlighted that there may be some reversal of the impact on GM in the following three quarters?
Sanjay Banka
See, Videesha, gross margin, what we have indicated will be between 15% to 16%, okay? So in this quarter in consol, you will see the — I’m saying H1 gross margin. It is always better to look at the cumulative trend instead of one quarter. So if you look at H1 gross margins, that is around 14.7% as against 12.2%. Now if you look at quarter-to-quarter, obviously, quarter-to-quarter has come down. So if you look at Q-on-Q, Q1 versus Q2, Q1 versus Q2 movement is significant. But we’ve always indicated that since our account, the industry is quite dynamic and due to extreme volatility in the gold prices, despite a high hedging of 95%, the increase [Phonetic] does not lead to a very symmetric result.
It’s always better to look at YTD, where our gross margin is 14.7%. This is net of the custom duty impact. So if my consol is INR2,904 crores and in my custom duty impact is INR29 crores, so 14.7% is effectively 15.7% gross margin, that is in line with the expectation we have given. And this is despite the fact that the diamond sales across the industry is on a muted side, while we have slightly improved our stud ratio. So we have to look at the number in the larger perspective, where we are very confident of what we have promised we are achieving, and we’ll continue to do more. While at the public forum, we’ll be given a slightly conservative estimate. But internally, we are all charged up given the excellent Dhanteras growth and we’ll continue to do more than what we promised.
Videesha Sheth
Got it. Got it. And just the last question to Suvankar. From an industry perspective, how do you see the studded segment shaping up? And would the consumption be led by the daily wear category or more the — more of the eye segment or wedding wear category? I’ll come back…
Suvankar Sen
So what — what I — what I am observing is that the studded share category is currently driven by the daily wear category. The high segment as a segment in the Q1 and Q2 were buying. It was the smaller ticket size items that were not getting sold as much as the higher value products, which is mostly with two objectives or two reasons. One is the pre-buying happening and the second was that people who had the disposable income were the ones who were buying more, while the general consumers for everyday wear and middle, upper middle class of smaller ticket size were buying less. But going forward, what we saw the change post, say, or during Dhanteras was that there were a lot many more customers buying daily wear and small items.
So if we want — if we want the studded share to grow and the strategy to move it forward, we have to focus more on daily wear items. The high value items will remain as it is and is being happening. And those customers are also trying to say that, oh, I might as well buy gold, it is an investment. But because prices of gold has gone up, 22 carat gold is more expensive, so people will prefer 14 carat. Government of India is thinking of bringing nine carat hallmarking also. So that will make the prices more if that hallmarking is allowed. So to — I hope I’m being able to make clear. To summarize that the high value segment is what is happening more, the daily wear segment is what will drive the growth in the future.
Videesha Sheth
Got it. Right, sir. Thank you. I’ll join back in the queue.
Operator
Thank you. We’ll take the next question from the line of Yash from Stallion Asset. Please go ahead.
Yash
Hi, thank you for the opportunity. Sir, you said that October ’24, you crossed INR1,000 crores sales. So congratulations for that. But obviously, this will have some impact of the price of the gold as well. So what has been the comparable volume growth, if you could tell me Y-on-Y for the month of October versus last year?
Suvankar Sen
Yeah. I will tell you that the volume growth would be in the lower single digit. So just let me check and get back to you. But yes, the value of gold compared to last year October is almost up by 24%, 25%. And let us keep in mind that internationally it is up much higher. It is the duty cut of almost 8% to 9% that is leading to the gold price whatever it is. So just to give what data we have is, last year, it was INR6,300 and…
Sanjay Banka
INR5,940 was the closing price…
Suvankar Sen
Yeah. So around INR5,800 to INR6,000 was the last year value. This is value of per gram, and this year it is approximately INR7,200 approximately. So it’s almost been a 20%, 22% value increase. So that is where it is. So the growth, exact number we’ll tell you. It will be around 3%, 4% volume growth.
Yash
Okay, okay, got it. And just from a — from like a growth aspiration perspective, are we satisfied with like a 7% growth in Q2 or do we think that given our brand recognition, especially in the East, we can grow volumes at 10% or along those sort of at least low double-digit kind of range?
Suvankar Sen
Can you come again? I couldn’t get you.
Yash
No, no, I’m saying that do we sort of target to grow by low double-digit in terms of volumes, what is your sense looking at, how is the consumer demand facing, just slightly longer-term perspective, three years to four years I’m saying? Or do we think that on a sustainable basis, we’ll be able to grow at volumes by — at high single digits?
Sanjay Banka
So yes, if I take this question, see, volume — in this industry, volume growth will lead to asymmetry in understanding because the consumer does not consume by volume. It is not a consumable product. Let’s say, petroleum product, I have to use 20 liters every week for my vehicle, come what may. And if I consume less, that means I have stopped my consumption. So this has to be seen in terms of revenue growth only. Volume growth discussion, to my humble understanding, is an academic discussion. So the 20% growth what we are saying is what we are confident.
Now if the price remains stable at this range, let’s say, price increases only by 5%, then the volume growth will be 15%, 5% plus 15%. But if the price increases by 25%, then you can safely assume that the volume degrowth of 5% will happen. Now this volume degrowth will happen at existing stores, right? Because we give a target to stores, not in terms of volume, but in terms of value. That’s my view. Our MD can say something.
Suvankar Sen
So I think from your side, you are trying to create a model. And in that particular model, if — there are two parts to the model. One is how much will you increase the price year-on-year and how much will you increase the volume year-on-year. So adding to what Mr. Banka said that if you take an estimate of 8% to 10% increase in price year-on-year, you must take around 8% to 10% increase in volume year-on-year. If the prices go up, then the volumes will come down. If the prices go down, then the volumes should come up. So that’s how you need to take on the whole scenario. Number one.
Number two, new store, matured store and growing store. So we kind of take a aspect again on a value term that some stores are growing at 15%, 18%, 20%, some stores are growing at 10%, 12%, some stores will grow at 7%, 8%. So that is how we do our modeling. So on an average, I think that 10% to 12% overall average increase on same-store sales growth basis and 6%, 7% for the new stores that we keep adding to the portfolio is what will drive the business.
Sanjay Banka
So this is…
Suvankar Sen
I think I could answer your question as much as I could.
Sanjay Banka
And so if I build on this — if I build on this, suppose my top line is increasing by INR1,000 crore, right? So as I say, 70% of this growth will come from existing stores. So, let’s say, INR5,000 crores versus INR6,000 crores is 20% growth. Now out of INR1,000 crores, 70% will come from existing stores. That is around 12% — 12% to 14%, balance 30%, that is INR300 crores will come from new stores, that is 5% to 6%. So this INR1,000 crores — if you keep this theory clear of INR5,000 crores and INR6,700 [Phonetic] crores and INR300 crores, then it will make very clear. Now this INR300 crores will come from existing stores — sorry, from the new stores of own and franchisee because to the franchisee, we make an upfront onetime sale, but that much sale will come from a store over five months to six months.
Yash
Got it. Got it. Very clear. Thank you.
Operator
Thank you. We’ll take the next question from the line of Deepak Lalwani from Unifi Capital. Please go ahead.
Deepak Lalwani
Hi, sir. Thank you for the opportunity. Sir, my first question is on the gross margins. Sir, historically, our Company has maintained the gross margin of 15%, 16%, but the breakup of this was that the first half was lower on the lower side and the second half was on the higher side of gross margin. So can you explain why this variation has been there? And today, when we are — when we have done a higher gross margin in the first half, so can you explain — also explain why — what has happened in this first half this time? Is there a material change in the business model? Have you reduced discounts or is there any change of terms with our franchisees? Can you just give a background of these two aspects?
Suvankar Sen
No. So what happens is that in the second half of the year, we usually see the festive season, we see the wedding season. So the — keeping your fixed costs the same, we usually have higher value, higher business, higher volumes. Out of five years, I would say three years behave in this way. And that is where we always say that, yes, the gross margins go up during the second half of the year, along with that, with the wedding season, then Valentine’s Day, all the wedding season is not only about people getting married, but also people who have already got married and want to give something to the wives. So therefore, the probability of diamond jewelry selling happening here is higher.
So these all add on to a higher gross margin on the second half of the year. What has happened in this particular H1 is, if you note that Q1, our gross margins went up, Q2, our gross margin has taken a hit because of the duty cut. But in general, this year — this particular H1, our gross margin is in the range of approximately 15%. And I think that in H2, with the price volatility, our gross margin will be in that same range. Overall, in the year, we take a gross margin of 16% to 17%. So therefore, I think there will be a more of a normalized gross margin for this particular year. Certain quarters give us maybe a higher number, certain quarters take away the numbers from you. That is number one.
Number two, yes, very rightly pointed out from a franchisee perspective, but that is not going to create much of an impact is where we did our internal rationalization of giving them the margins either in gold price or making charges, but all in all, our franchisees continue to enjoy a margin that they were enjoying before. So I think it is more to do with the business. And Q2, keeping the fixed costs same, the business really went up and that is where we have seen the benefit. But yes, if we see a lower downward pressure, it is because of the loss that we have booked. Now if you add on to that particular duty cut loss, then you will see that the picture would look much better. That is number one. But at the same time, let us keep in mind that because the duty cut happened, the sales went up. So these are the multiple moving parts with which we are working. So I could — I hope I could answer your question. And Banka, if you want to add something?
Sanjay Banka
Yeah, Deepak, I will add slightly on this. So as you say that the gross margin changes because the situation in every quarter is not same, the price volatility is not same, okay? Now due to this price volatility and situation in the quantity and the exact moment of price rise, so on which date in the previous quarter in Q2, the price change. So while this question keeps coming to us, but yeah, the process, let’s say, in last year quarter one was 12.3%, quarter two was 11.7%. But as it is 12.3% in Q1 last year, this year we made 17%. And we explained that this — so this is not comparable because then the rub-off effect, let me call it the rub-off effect of a higher gross margin will come in second quarter. So now last year, we had 11.7% in Q2.
So if you compare on Q2 to Q2, it is 11.9%, but that would be more of an academic explanation, which I can convince usually. But then if you look at the custom duty impact, now on a sale of — on a sale of INR1,500 crores approximately, we have taken a hit of INR30 crores. So 2% has been impacted on account of custom duty only. So what you are saying is 12%, it is 14%. So we suggest that look at the whole year or at least a moving average three quarters to four quarters and we will definitely get 15% to 16%.
Deepak Lalwani
Sure, sir. That is quite helpful. So one should assume a normalized 15% to 16% margin for the full year and the second half could also be on that side. Well taken, sir. And sir, we have, as a Company, taken an enabling resolution for a QIB of about INR500 crores. So can you explain the rationale behind it and what are we thinking in terms of the usage of this…
Suvankar Sen
So I’ll tell you, it kind of triggered in our mind in the month of August actually, right, when the gold prices — the duty cut happened and the prices fell and we could see a very good demand at the consumer end. So in the month of August, when we saw the good demand happening and we were all getting extremely kind of frustrated is the right word because if we had more stock and more inventory, we could have sold more. So that kind of triggered in our mind that what is stopping us from growing more is the availability of capital. At one end, we are talking to the banks and trying to arrange for capital and funds. But they — the banks will take their own time and there is a limit, the debt equity ratio has to be maintained. All those things are one part.
And again, while we started seeing the good demand in the month of September, just after that, we saw the gold prices continue to move up at all-time high. And again, you want to plan, you want to have a certainty, but these movements and most of our gold that we take, ability to take gold on a timely manner, so that we could fulfill the demand. It is just getting hampered. So we thought that no, let us — the IPO has happened. It’s been one year, and we were initially planning for a much higher amount during the IPO, but later on, due to the market condition, we had to agree on a much lower amount and plan accordingly. So now that market has stabilized and I think that the opportunities of growth continues to remain, so we have decided that let us raise a round of QIB for the future growth of the Company. And Banka ji, you want to add on something?
Sanjay Banka
Yeah, Deepak, if you look at the gold prices, so when we went on roadshow in the month of April ’23, gold prices were around INR5,972, okay? And currently, we are at INR7,486 or INR7,800. The gold prices has increased almost by 25%. So if you look at balance sheet of March ’23, my inventory was INR1,877 crores. If we exclude other inventory, let’s say, diamond platinum out of INR1,877 crores, my gold alone was INR1,407 crores. Since the gold price has increased by 25%, that INR1,470 crores — INR1,407 crores has also reduced by 25% due to the GML. So INR1,407 crores into — if you do 25%, it will come to again to INR350 crores to INR400 crores. So INR350 crores to INR400 crores is a minimum fund which are required to maintain the same level of gold which was there in April ’23. Now between April ’23 and today, we have added at least 18 stores plus 7 stores, 25 stores. And now out of that, at least 12 to 13 are own store. Now 12 own stores into INR20 crores is INR240 crores. So INR400 crores plus INR240 crores becomes INR640 crores. And for next — for next expansion growth, what we’ll discuss in roadshow, for that also require fund. Moreover, due to increase in the gold prices, the hedging margin had increased. So this QIP is purely in order to maintain the business at the same level and that’s why we are raising this fund primarily for the working capital.
Deepak Lalwani
Understood. And sir, any change to our store addition guidance given that we have less capital today, the 18 stores to 20 stores is possible. Any understanding from you?
Suvankar Sen
Yes. No, no, the store addition target continues to remain the same. Gold prices moving up by 20%, 30% would in effect mean that 20%, 30% more capital is needed to open the same number of stores or you reduce the number of stores by 20%, 30%, right? So we are — there are stores in the pipeline. There are six stores, seven stores, company-owned company-operated stores in the pipeline. There are franchisees, four franchisees, five franchisees in the pipeline. They — I think this price fall is only going to enable the franchisees also to arrange for capital easier, faster and for us also to grow easier, faster. So I think that 18 stores to 20 stores, maybe at the end of the year, we will end up doing 15 stores or 14 stores, but in our mind, we have to manifest 18 stores to 20 stores minimum that we want to grow with.
Deepak Lalwani
Understood. Sir, last question I had on our hedging practice of — you mentioned that 85% is the hedging percentage. So is it on sales or is it on the inventory? And secondly, what is the mix between gold metal loan, MCX contract?
Suvankar Sen
So it is on inventory and then the — Mr. Banka will share.
Sanjay Banka
Yeah. So Deepak, one is that last year it was almost 90% average, in quarter one, 90%, quarter two, 87%, quarter three, 92%, quarter four, 90%. This year quarter one was 95%, and as the prices rose, it reduced to 85%. It is on the inventory. Once again, inventory means the total inventory less diamond. So whatever the total inventory that you see in the balance sheet around INR2,800 crores and out of INR2,862 crores, you can reduce INR500 crores — INR400 crores of diamond and other gold platinum. So INR2,200 crores to INR2,300 crores of gold is hedged.
Now out of that, whatever the GML amount, so let’s say the GML amount is almost unfixed, balance we do at MCX by future sale. This is a practice the entire industry follows, and we have got a panel of expert advisers who have been working with us, a total team, which closely monitors the gold price movement and to derisk the balance sheet and the risk of investors. Because for us, the interest of the investors and shareholders, that is of paramount importance because we are not running a hedge fund, we are running a business. And hence we have to derisk the metal volatility to our investors fully.
Operator
Mr. Lalwani, I would request you to kindly rejoin the queue for follow-up questions. [Operator Instructions] Thank you. We have the next question from the line of Mr. Dhiraj Mistry from Antique Stock Broking. Please go ahead.
Dhiraj Mistry
Yeah. Hi. Good morning and congrats on very good set of numbers. So my question a bit broader, how do you see the competitive? When we saw that there was a gold price surge during first quarter, there was a many — good amount of competitive intensity was increased by the unorganized player. Now that the gold price is still rising, the demand has been good, mainly because of the festival period and wedding season, but once that phase out, how do we see that the competitive intensity to remain with gold prices continues to moving up?
Suvankar Sen
No, so I think that the competitive pressure will remain because the hunger to grow is in all organization and they are using various strategies and various methods to grow. You have rightly pointed out that when gold prices move up in a very short period of time, then to ensure that the consumers’ footfalls keeps coming to the store, people take certain — more aggressive actions and bring down the prices, give discounts and so that consumers are coming to the stores. And when suddenly you will realize that when gold prices suddenly come down, like it happened in duty cut, then people take a hit, that intensity reduces to that extent that automatically consumers are coming and they want to protect their books.
But again when it goes up, that intensity will again go up. So for the going one year, two years minimum, the intensity will remain. That is number one. But at a much broader perspective, we at the industry level is also of the opinion that this is not sustainable. We all have to create our unique propositions. We have to work on the designs or we have to work on the service and that should remain the crux of the business as we continue to grow. So there has to be a sustainable level of growth and the rest will be based on the individual performances. So maybe for one year or — this thing will continue to remain, and after one year, two years, it will normalize. That is what we feel because the industry overall is already talking about how to manage the situation.
Dhiraj Mistry
Got it. And just follow-up on that. Can you throw some light between the demand amongst the region when I compare North versus East, and within the East also, how do we see the demand between urban market and rural market? You can throw some light on that as well, please.
Suvankar Sen
Right. So see, for us, we are — we have to say that our strength is Eastern part of the country. That is where the Company originates from, and that holds to around 18% — 80% of the overall sales from the Eastern part. North part covers about anything between 10%, 12%, 13% of the overall sales and the remaining is done by the South and West. If we look at Q2 particularly and most of the franchisees that we have is from the Eastern part of the country. The growth from the Tier 2, Tier 3, Tier 4 towns and the semi-urban or semi-rural markets have been actually the one which has driven the sales for Q2.
So I think the agricultural sector did very well, and that is what the result was in terms of the availability of liquidity and also the inclination to buy more gold and all of it during Q2. So Dhanteras, Diwali, we also saw a equal kind of demand from the smaller towns as much as also from the bigger cities. But yes, because the prices were high, I think that many — the smaller ticket sizes were selling more in the bigger cities at one end and a very high value products for weddings were selling at the bigger cities at the other end. But when it came to the smaller towns, it has been a average ticket size say — to give you an example between say INR70,000 to INR1 lakh was what the smaller towns might be asking for.
And in the bigger cities, we have seen one demand coming at around INR30,000 to INR50,000 and the other demand coming at around INR2 lakh to INR3 lakh. So are you — this data will only give you a picture that the bigger cities, there is one group of people for daily wear and one group of people is the one for wedding or high value purchase and the bulk middle is the smaller towns. So this is the way that we are seeing the demand.
Dhiraj Mistry
That’s very well clarifies everything. Just one request. I failed to find PPT on exchange or on your website. The lot of data has been available in that PPT. Can you share that as well going down the line, please?
Sanjay Banka
We will do that. As you said, we have to — we are going for — so we will update it in next two days’ time, three days’ time. Kindly give us some time, we’ll update it maximum by tomorrow.
Dhiraj Mistry
Sure. Thank you very much. That’s it.
Operator
Thank you very much, sir. [Operator Instructions] Thank you. We’ll take the next question from Shirish Pardeshi from Centrum Broking. Please go ahead.
Shirish Pardeshi
Good morning, Suvankar and Banka ji. Unfair that my chance I’m going to ask only one question. So Banka ji, when you look at the standalone business, you said the growth is about 30%. But when I see the other expenses, which has grown 39%. So this INR98 crores expenses, can you share what is there? And related question on this is that this onetime, whatever loss we are booking, is it the part of other expenses or we have adjusted in some other line items?
Sanjay Banka
See, onetime loss is on account of inventory. See, it is cost of goods sold. The goods, which I purchased at 100 [Phonetic] plus 15 [Phonetic], I’m selling at 100 [Phonetic] plus 6 [Phonetic]. So if the impact is coming in the gross margin, that’s what we say that what you are seeing the gross margin at 11.9%, it is effectively plus 2% more. So as against INR1,500 crores, approximately there is a INR30 crores of gross margin impact also.
Shirish Pardeshi
Okay.
Suvankar Sen
So that is the…
Sanjay Banka
That is on the gross margin. Which other expense you are referring to?
Suvankar Sen
So he is asking that the other expenses have gone up. So what is mostly your component?
Sanjay Banka
See, other expenses, Shirish ji, I will tell you, we have been saying that we have been working on a very agile framework and we have said that Calcutta is our strategic locational advantage. Now having said that, as our desire to grow, we talk internally about minimum $1 billion and $2 billion over next five years. We have to build up our system, people, process, technology, training and the entire infrastructure. We are also investing highly on the customer experience. We are investing heavily in technology for CRM. We have metaverse. So this is not expenditure, this is investments toward the future. Although as an accountant, it is coming in financial and other expense, but this is all investment for future.
Shirish Pardeshi
Okay. Just one quick follow-up on this. So we have a substantial number of franchise. So under this custom duty reduction, have you covered the franchise inventory also?
Suvankar Sen
No. So when we are hedging, sir, we — the franchisees inventory is on their books. So that is not hedged by us. So that’s the plus and minus that the franchisee has to take on their books. So we are only hedging the inventory that is lying in our books, which is either the inventory lying at the stores or inventory lying at various warehouses or head office.
Shirish Pardeshi
Okay.
Sanjay Banka
So franchisee have their own hedging policy. The good thing is that franchisee have made money on account of rising gold price. So if the gold price has risen by 25% to 28%, they have made money. So similarly, they have taken a onetime hit, but they are very clear that long-term the gold price will continue to grow, while we have been encouraging the franchisee also to do the hedging, it’s their own business decisions and they are happy with their business model. And we did not interfere with the franchisee in their business model also.
Operator
Mr. Pardeshi, I would request you to kindly rejoin the queue for follow-up questions. Thank you. We’ll take the next question from the line of Vikrant Kashyap from Asian Market Securities. Please go ahead.
Vikrant Kashyap
Good morning, Suvankar ji and Sanjay ji. And must congratulate on your performance YTD. My question pertains to Sennes portfolio. So you opening — in the opening remarks, you mentioned that you have added four Sennes stores. So does this mean that you have taken the total account for heat? And what is your strategy going ahead for the LGD portfolio?
Suvankar Sen
So first, the strategy for the LGD would be that we wanted to create Sennes as a brand, which will fulfill the aspiration of the upper middle class, bringing in products which are of, say, international designs, international quality, but at prices, which will be something easy on the pocket. That is number one. Number two is that just bringing out a normal lab-grown diamond jewelry would only not add much value to the jewelry, and that is where Sennes would come out as a lifestyle and a design kind of a branding. And so jewelry design, bags design, adding to that the lifestyle aspect of perfume. So this is where overall the Sennes brand is a modern new-age brand that can open stores in malls and cater to the aspirational young generation India is where we wanted Sennes to stand.
Because the moment you think of Senco, you think of tradition, you think of trust, you think of the jewelry, the legacy, but you don’t think of some kind of modernity inspite of the fact that we are coming out with brand ambassadors, young generation, all of that. So this new brand has to have a new look. So this is where Sennes wants to be positioned themselves at. And in terms of the new stores that got added for Sennes, we have stores in Calcutta that we got added. And there were two stores, three stores in the previous quarter that we had in Delhi and Chandigarh. So — and upcoming stores of three more stores of Sennes will be added.
The total number of Sennes stores, now Sennes bags are available in many of our Senco stores as a shop-in-shop itself. And exclusive stores of Sennes, EBOs as we call it is now that are being created. So I think total six stores, it is there. So we have six stores in totality. So if I may — if I’ve said four stores, maybe it is my mistake. It is…
Sanjay Banka
Mani Square, Forum Mall, City Center, Airport.
Suvankar Sen
Lajpat Nagar.
Sanjay Banka
Lajpat Nagar and one more, Elante Mall, Elante Mall.
Suvankar Sen
Yeah. So total, we have six stores of Sennes and two stores, three stores more in the pipeline. Yeah.
Vikrant Kashyap
Okay. So just…
Suvankar Sen
By the end of the year, we will have eight stores to 10 stores. I think that is what we are looking at.
Vikrant Kashyap
Okay, great. And just follow-up on the LGD. So we are looking at affordable price points for lab-grown diamond or we will have some bigger pieces also? Which of the portfolio we are targeting?
Suvankar Sen
So mostly bigger pieces, $0.30 [Phonetic], $0.40 [Phonetic], $0.50 [Phonetic] and above, not the smaller size diamond. The smaller size diamond could be an additional feature to the big size diamond because as we all know that the value difference and the value proposition of lab-grown is in the bigger size diamond and not on the smaller size diamond. So that’s where — how we will want to position that.
Sanjay Banka
See, basically Vikrant, this is for the aspiration of the middle-class, where they want to own a solitaire of, let’s say, one carat of, let’s say, INR4 lakh or INR5 lakh and which takes them 10 years. So a solitaire of one carat of a lab-grown diamond can be afforded in INR40,000 to INR50,000 also. So that is what is the — and the margins in the lab-grown diamond are slightly superior than the natural diamond. So it is better. It is better that way to keep this market also on and not to lose sight of this market and depending upon what is the dynamics of growth in this market and particularly.
And second, the small-size diamond what we said, our majority — the stud ratio of 11%, 12%, which we say, majority of them are below $0.07 [Phonetic] to $0.08 [Phonetic], $0.07 [Phonetic] to $0.08 [Phonetic] range. Now in $0.07 [Phonetic] to $0.08 [Phonetic] range, a lab-grown diamond will not make economical sense. So the price differential will not be very low and then the realization price. So we are looking at as far as rightly said, more than at least $0.30 [Phonetic], $0.40 [Phonetic] for a — as a solitaire product.
Operator
Thank you. Mr. Kashyap, I would request you to kindly rejoin the queue for follow-up questions, please. The next question is from the line of Devanshu Bansal from Emkay Global Financial Services. Please go ahead.
Devanshu Bansal
Yes, sir. Hi. Congratulations on a good festive in October. Suvankar, some of the retailers in other categories like apparel are indicating challenges due to protests in Kolkata. So I just wanted to check, how should we see your Q2 numbers? Had this incident not taken place, would our growth been even better versus what we have reported?
Suvankar Sen
No, I don’t think that the event that has happened in Calcutta had much of an effect on the jewelry category, because jewelry is more planned and people who have to buy will be buying for whatever their occasions are. It is not so much impulsive as the other apparel or other categories would be. So yes, before the Durga Puja, there was some amount of kind of sombrerity [Phonetic] and little bit of — the sentiments were low, and that picked up much late, more closer to the Puja date. And that’s why the other brands faced what they had to face.
But for us, the main season for us is the Dhanteras. It starts during Navratri and it builds up to the Dhanteras. So I don’t think that had much of an impact. And on the other hand actually while the situation was grim, we were — we participated in various sponsoring, various pujas and whatever, be it across the country, which — various cities, and we wanted to be a part of the culture and as a brand belonging from this particular part of the country, we thought that we should support the Durga Pujas all across the country and across the world. So we did what we had to do. So I’d say that we weren’t so much impacted by it.
Devanshu Bansal
Understood. Last one thing I wanted to understand one of your comments. So H1, we have delivered about 20% growth, and YTD, if I heard it correctly, you said it is 15% to 18%, right? So if you could just confirm this number?
Suvankar Sen
15%. YTD is 15% and H1 is 17%.
Sanjay Banka
See, consol revenue, if we take the number there also, it has increased from INR2,452 crores to INR2,904 crores, it is 18.5% consol revenue.
Devanshu Bansal
Consol revenue is 18.5% versus 18% growth in H1 is what you are saying?
Suvankar Sen
17% growth in H1.
Sanjay Banka
In H1, correct.
Suvankar Sen
And consol is 18.5%. Correct?
Sanjay Banka
Yes.
Devanshu Bansal
18.5%. Okay. Understood.
Suvankar Sen
And YTD, YTD, this is like latest, is 14% — 15% approximately as of date, because we — the last year, Dhanteras was in 10th of November and we are speaking on today, 14th of November. So this is just an update.
Sanjay Banka
See, sorry, I’ll just add here also. See, when the festival ends, so as we said that Dhanteras has been excellent for us and Dhanteras sale, we — this month we did almost INR1,000 crores. So obviously, post Dhanteras, five days, six days, 10 days will be slow, okay? So what sir has quoted as 15% is the post Dhanteras effect. So now that we are talking about some 40 lakh weddings, okay, and a major part of wedding which has been shifted to Q3. So the 15%, as of today which sir has said, will again become 18% to 20%. So Q3…
Devanshu Bansal
Understood. Understood. Yeah.
Sanjay Banka
Yes.
Devanshu Bansal
Yes, so it is the — in this period, there is a larger period that we are including, which is leading to some slowdown and things should eventually pick. Is this the right understanding?
Sanjay Banka
So it did not slow down. Let’s not call it slowdown. People have bought in huge bulk…
Devanshu Bansal
In huge amount, yeah.
Sanjay Banka
Yeah, in huge amount. So it is just a short cooling off.
Devanshu Bansal
Short cooling off.
Sanjay Banka
It usually happens after every festival. So Akshaya Tritiya, post Akshaya Tritiya, two weeks will be slow, but at the end of quarter, it will be like this. So at the end of Q3, you will again see 18% to 20%. I am not saying more than 20%. So I am saying 18% to 20% at the end of Q3 for nine months.
Devanshu Bansal
Understood, sir. Thanks. Thank you, sir. Thanks for answering my questions.
Operator
Thank you. We’ll take the next question from the line of Gaurav Gandhi from Glorytail Capital Management. Please go ahead.
Suvankar Sen
Hi, Gaurav.
Gaurav Gandhi
Yeah. Thanks for the opportunity. Sir, this is the time in the market where everyone is bullish on the jewelry, fashion jewelry or the business you are starting under Sennes brand. Every company is adding stores and increasing square feet. As an investor, we always have a concern regarding unit economics or per store economics, growth is good, growth is good, but it should come effectively with sustainable profits. So while growing the new business under the Sennes brand or the existing business, how much do you focus on the unit economics or per store kind of metrics? Your thoughts on this?
Suvankar Sen
Yes. Yes. No, our focus on unit economics continues to remain. I will tell you how. It’s because when we are planning our expansion, we want to continue to expand and penetrate deeper and deeper into the East India market. So in our growth expansion plans, almost 65% to 70% of the new stores that we add is in East, which is our strength, around 15% to 20% would be North and the rest would be West and South because the balance between economies of scale and leveraging on the brand goodwill so that your profitability remains high has to continue.
And that is where, even while Sennes as a brand is created with a long-term vision, but we are focusing on expanding in the Eastern market where our strength lies and we will build up the brand, the unit economics. But again, at the same time, when you launch something new, while Senco is a 85-year-old legacy brand and whatever profit, growth, goodwill, everything that we are benefiting out is of the effort put over so many years. When you launch a new brand, a new product, obviously, you will have to invest a little bit with full optimism that over the next two years, three years, this will become a profitable brand.
So initially it is at an investment stage. That’s why we are not going all out and expanding rapidly in a very — I would say in a very aggressive way. We are going step by step, four stores, five stores, six stores, 10 stores. And as we open, we are looking at the consumer behavior, we are analyzing the data, what is the product consumers are asking for. We are rationalizing the marketing expenditure, investing a little bit out of the Senco branding and marketing budget into the Sennes marketing and branding budget, building the website. So yes, that balance is important. So 80% is profit, 20% is future growth. I would say that’s a good way to look at the overall future strategy.
Operator
Thank you very much, sir. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Sanjay Banka
Yeah.
Suvankar Sen
Okay. So thank you everyone for the time that you all have spent with us to understand about our Company. The coming wedding season with the data that speaks of more than 40 lakh weddings in the month of November, December, January, February up to March, will act as a full trigger. And along with the wedding season, any kind of buying and purchases that is linked to weddings, I think will all act as a great boost to the industry and not only to us, to everyone. We are also very hopeful that the price fall in gold that we have seen over the last 15 days will also act as a boost to the industry.
Many consumers who have been waiting in the sidelines to buy jewelry, if the prices become reasonable, will again want to utilize this opportunity and buy the jewelry. Once again, we are taking our initiatives of expanding of promoting amongst our customer base and also the new customers that we’re reaching out to, so that they can come and buy. The new collection, the new campaigns will be starting for the wedding season in November, December. January, February, again, will be a focus on diamond jewelry with the Valentine’s Day and the love season as we call it. And also just to say that we at Senco along with the growth, along with the profitability, we are trying to encourage in terms of the various best practices.
In this particular quarter, we had been awarded from MCX as one of the best hedgers in the jewelry industry. In the month of August, we were very fortunate to be a part of the Morgan Stanley Capital Index for the small caps. So that has been, I would say, a great trust that the investors have posed on us, and we want to live up to their expectation. We have also won an award from Network18 called the Green Ribbon Champions for Excellence, because through our business, along with that the way we are promoting old gold exchange, gifting of trees to the consumer and taking certain initiatives for protecting karigars [Phonetic] and women empowerment. So we also were a part of an event called the She Shakti.
And it was very important that while we went through the season of Shakti with Durga Puja, Kali Puja that we always — consumers, women consumers are 85% of our customer base and whatever initiatives we can to support women is something that we at Senco believe in. So we will continue to focus on other aspects along with our business and the lab-grown diamond jewelry will be strategic in nature. We will keep judging how the consumers are reacting. There is a demand, there is a market, but it also will need a kind of awareness and push from our side, and we will take a calibrated approach towards the lab-grown diamond and the new products.
And as far as diamond jewelry is concerned, we are confident that in terms of pricing, in terms of designs that we are creating, we will be amongst the best in the industry. And it is up to us that how much we can penetrate and reach the customers so that this stud ratio that we are currently in can improve. Our endeavor is to take this stud ratio towards 15%. Currently last year it was 11%. We were aiming that this year we will be closer to 12% to 12.5%. Due to the market condition, we are stuck at about 10%, but we still have four months’, five months’ time. And I think we’ll put all-out effort to increase the stud ratio with the designing as well as the pricing. And as far as competition is there. We must say that the industry overall is doing good.
We are trying to support each other, sharing our challenges, our problems and trying to work together towards it. So yes, I think consumers are benefiting from the expansion of the industry. It looks that amongst the various sectors, our sector continues to remain attractive because of the returns that the consumers are getting. It is not only adornment, but it is also an investment, but it is not only that amongst these organized players that we are kind of competing against. The unorganized to organized shift continues to happen with the branding effort, with the design effort, with the expansion. And we should all enjoy the benefit of the shift that we see in the industry.
So thank you once again for your time and look forward. And today is Children’s Day. So while I would say that there is a child in all of us and that enthusiasm and energy is needed so that we can continue to grow in the future. So Happy Children’s Day to all of you.
Operator
Thank you members of the management.
Sanjay Banka
Thank you everybody for joining the call. We really are grateful to all our investors for showing faith and trust in Senco growth story. Thank you.
Operator
[Operator Closing Remarks]