Senco Gold Ltd. (NSE: SENCO) Q3 2026 Earnings Call dated Feb. 13, 2026
Corporate Participants:
Suvankar Sen — Managing Director and Chief Executive Officer
Analysts:
Unidentified Participant
Vikrant Kashyap — Analyst
Sanjay Banka — Analyst
Devanshu Bansal — Analyst
Mihir Shah — Analyst
Bharat — Analyst
Vijay Chauhan — Analyst
Rupesh Tatiya — Analyst
Raj Saraf — Analyst
Sonal Minhas — Analyst
Abhijeet Kundu — Analyst
Omkar Hadkar — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Q3FY26 earnings conference call of Senco Gold Limited hosted by Asian Market Securities. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation. Should you need assistance during this conference call please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vikrant Kashyap from Asian Market Securities. Thank you. And over to you sir.
Vikrant Kashyap — Analyst
Good morning everyone. On behalf of Asean Market Securities I welcome you to the Q3FY26 earning conference. Call of Senco Gold Limited. Today we have on the call with. Us Mr. Swankar Sen, M.D. cEO and Mr. Sanjay Banka Group CFO and IR Head. Without much much ado, I now hand. Over the call to Mr. Suvankar Sen for his opening remarks. Thank you. And over to you sir.
Suvankar Sen — Managing Director and Chief Executive Officer
Thank you very much. Vikrant. Happy morning to everyone. We would like to start the call being grateful to all our investors for having their faith on us and on our team and on our. And we must say that this particular quarter has been a historical quarter for Sencobo Limited. We’ve crossed 3000 crore of revenue, an EBITDA of rupees 400 crore and a PAT of rupees 264 crore in this particular quarter. So this is something which becomes much more special because we have seen that this particular financial year has been one which has been extremely volatile.
The gold prices have reached one 40,000. Rupees for that particular quarter. Post that it has gone up furthermore. And currently it is in the range of 1:50,000 plus rupees. There has been a growth of almost 65% in the gold rate and about 23% in the quarter itself. But in spite of the high gold price what is most encouraging is that the consumers have continued to keep their faith and confidence on the gold and jewelry as a category. We had Dhanteras in that particular quarter. The wedding season was in full swing. And keeping all those two aspects in mind we have seen that in self on the Dhanteras month we have had sales of 1,716 crore for the month of October.
But very important that we as a team have kept in mind is that at these high gold prices how is the consumer behaving? It is not that the high gold prices is discouraging the consumer. It is rather that their faith and trust on the commodity of gold or Silver as a category is increasing. It is only up to us as jewelers as to fit into the budget of the consumer, create products, whether it be in 22 carat, 18 carat, 14 carat or even 9 carat, which became, you know, allowed by the BIS agency, by the government of 9 carat hallmarking.
And I think we can proudly say that Senco Gold and Diamond has been one of the first few jewelry brands to have introduced nine carat jewelry in gold and in diamond jewelry as well. And it is this mindset of trying to understand the pulse of the consumer and fitting to the budget of the consumer that is allowing and enabling us to continue to sell and continue to grow. Our hyperlocal strategy that we have been pursuing for the last one one and a half years, studying very closely on the local consumer needs, the use of technology in analyzing the data as to what is the exact product that is being sold at the store level.
In terms of design, in terms of budget, I think that all have played on and it has become that much more important in today’s day and time in analyzing the data and exactly placing the right of product that is going to fit into the budget of the consumer. Our franchisee revenue out of the total share has been 33%. The own store revenue has been around 65% and 2% has been on the other channel sales. And I must tell you that this particular quarter, because the share of our own store channels have been higher than that of franchisee, that has been one of the major factors that has led to a higher profitability.
The fact that our diamond jewelry touch ratio sales have also gone up by 38% in terms of value and 10%. In terms of volume has also played. A pivotal role in adding to the profitability for that particular quarter. Now in terms of designs, we have launched more than 6,000 designs in gold and more than 3,000 designs in diamond for the quarter. New collection, new ranges, whether it be for weddings, whether it be for everyday wear, gifting, I think that has always. We have segmented all those various needs of the consumer and accordingly designed. Our philosophy and our vision is that. Senkou Gold and Diamond should be known. As a house of design. Whether it be in jewelry or in other accessories. After all, being from a place which is of art and culture, design should be our forte. And that is what should make us continue to grow in the future. We have also seen that the growth in the tier 2 and tire 3 markets have been robust as well. Currently we have got 196 stores in the Whole network and hopefully by the end of this quarter we should be reaching 200 plus stores. As we end this particular quarter we need to look forward this particular quarter we are seeing Valentine’s Day, it is tomorrow.
So therefore we are seeing a decent traction from the consumers with relating to diet, diamond jewellery, everyday wear jewelry, couples coming and buying. So that has been, you know, the elements of love has been the campaign that we have launched. The wedding season also continues to remain strong. And we are seeing that many consumers who are not only having weddings in the close proximity but also in maybe six months, eight months down the line. But in this volatile gold crisis they are thinking that these could be the good levels to buy and they are preponding their purchases and buying.
So we continue to see a strong robust growth. This particular quarter we hope that we should be 25% plus growth that will continue to happen. And going forward for the coming year we shall remain focused, we shall remain strong. We shall want to drive our franchisee model in a much more stronger way. Work on the diamond jewelry segment so that we increase our stud ratio, continue to work on operational efficiencies, economies of scale, building the brand and have a growth of 20% plus for the coming financial year as well. So thank you very much for all your ideas, all your encouragements, inputs and we shall be thankful to our team for the great performance.
Please, if you would like to say something.
Sanjay Banka — Analyst
Yes sir. Thank you very much. Once again gratitude to our investors. So as we have said that’s for the quarter the revenue has grown by 50% YoY to 3000 crores. The adjusted EBITDA like the EBITDA had grown by 406% from 80 crore to 404 crore. But if you look at the custom duty impact of in quarter two and quarter three last year then the adjusted EBITDA for last year quarter three was 107 crore and this year is 404 crore. So the adjusted EBITDA margin is around 13.2%. And PAT has grown from 33 to 264 689%.
But adjusted PAT taking the impact of custom duty it has grown from 53 crore to 64 crore. That is 390% for this quarter. And for the nine month period the revenue has grown by 30%. And so the adjusted EBITDA has grown by 133%. That is from 298 crore to 694 crore. And the adjusted PAT has grown from 139 crore to 417 crore. That is 200%. So it’s very important to understand that while we have been talking about a sustainable business margin of around 7.2 to 7.5% and recently in this quarter we have given a guidance of around 7.5 to 7.8 for FY27.
So that is the full year margin but quarter three margins are usually higher. So last year we had given a detail that our quarter three margin in 23 was around 12.1% and quarter three margin in FY24 was 11.1%. So if we look at 13.1% it should be seen in that context because the sales are quite high whereas the fixed opex remains the same. And if you look at we have ascribed this to two three reasons. One is your product mix has improved. Secondly, the lightweight jewelry where the customer does not get the same jewelry weight at other jewelers and then he’s willing to pay extra prices to us, extra making charges to us.
Similarly, the diamond prices which we are offering are quite attractive. And moreover some impact of gold price rise has also come. Overall this is on the financial side the working capital requirement has also increased. So what you have seen is that the inventory value has increased from 2,963 crores to 4,602 crores. This has been funded by the borrowing as well as the trade payable. Importantly, we have focused very highly on the working capital efficiency and inventory management. We have implemented an AI based software which help us to monitor the inventory real time. And our inventory days have remained range bound at 166 to 188 days.
And going forward we look at similar trend. In fact if we look at other players it is also in the range of 180 days. So as the stead ratio improves, the inventory days is likely to remain in the range up to 180 days. Moreover, as far as the labor code is concerned, we have analyzed the impact of labor code and we have taken a one time extraordinary impact of around 6.2 crore. That’s on the financial side. So we should see the result for quarter three and YTD in the context of custom duty impact of last year.
Similarly from the banking side we have maintained a very good relationship with our working capital bankers. Our working capital limit which is 2,400 crore and our blended annual last year due to this elevated gold price we had to reduce the percentage of GML and it has not increased. The portion of CC and WCDL got increased which led to our blended ROI slightly higher. We are very happy to note that our credit rating has been first time credit rating while our current credit rating is being done by icra. Care Edge has done our second credit rating and they have given us a rating of A1.
So they are doing the rating for the balance entire amount and we are very confident that with the enhanced rating from Care we can look at reducing the blended ROI by 3040 basis points in next year. So with that we pause our discussion and opening remark and then thank you very much and we invite queries from you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Devanshu Bansal from MK Global. Please go ahead.
Devanshu Bansal
Hi. So uncle and team, congratulations on a good performance and improving franchisee interest for the brand.
operator
Mr. Bansal, are you there?
Devanshu Bansal
Yes, hi.
operator
As there is no response, I’m taking the next question from the line of Mihir Shah from Nomura. Please go ahead.
Mihir Shah
I hope I’m audible. Hello. Operator, am I audible?
operator
Mr. Shah, are you there?
Mihir Shah
I am there. Can you hear me? Am I audible? Seems like there’s a mute from your side.
operator
Hello?
Mihir Shah
Hello operator, am I audible? I can hear you.
Sanjay Banka
Am I audible?
Mihir Shah
Okay, perfect, perfect. Thank you, thank you for that. So Congress on a great set of numbers. So firstly just wanted to check on the guidance of 25% Facebook that you highlighted for 4Q. Given the gold prices where they are and the increase that we’ve seen during the last quarter and this quarter, it seems the 25% guidance seems quite low during the current momentum. Do you expect a material drop in ESPs in 4q or a material drop in volumes which is leading to this lower guidance? So that is question number one.
Suvankar Sen
No, no, I do not see any material drop in ASPs. I’m just looking see if you look at the Q to performance also you will see that there have been a drop in volumes even though the ASP remain the same. So we are about 45 days into the quarter in the month of March there is Holi, the exam seasons go on. And then we also start looking at consumers behaving in a MANNER that on 19th of April we have Akshaya. So then consumers start waiting for Akshay Titiya. An auspicious day to Buy. So yes, our guidance of 25% is little on the conservative side.
Maybe you know, as the, you know, we are closer to the end of the quarter, this 25 might become 30, 35, but we are still giving a conservative guidance of 25 to 30%.
Mihir Shah
Understood, understood. So this is not a function of what you have seen thus far in 45 days of the quarter. Fair to assume that the growth momentum that we saw in third quarter continues in the first 45 days of the fourth quarter and it is just the conservative way that you are thinking about it.
Suvankar Sen
Yeah, yeah, we need to, we believe in that conservative way. See, the growth momentum of third quarter has to be also because of the dhanteras. But you know, dhanteras doesn’t happen every quarter. Therefore yes, it’s, it’s. It’s that way to look at it.
Mihir Shah
Understood, Fair point. Second question again is on the margin front, you know, margin improvement of 7.5%. It was indicated it was a function of the product mix improvement and lightweight having higher margins. So as far as the product mix is concerned, we probably thought if the studded ratio increases, but given that the gold in the stud prices, gold prices are significantly higher in the studded, the margin profile for studded also goes down. Is that understanding incorrect? And if not, then what is driving the improvement in margin from 7.1 to 7.5?
Sanjay Banka
When we talk about product mix, it is not merely the stud ratio. Obviously on the diamond jewelry the margins are higher, but there are different types of jewelry, right? You know, like you see in case of other players with high bullion sales, in our case bullion we don’t sell, we don’t sell bullion. In our case the coin sales, which I have said earlier, around 4, 5%. And it is about the jewelry as well. There are different types of jewelry, different prices. If I sell more of antique jewelry, more of Polky jewelry, as I said in the opening remarks that if I sell more of lightweight jewelry, the making charge effective making charge on lightweight jewelry is more much higher.
Moreover. Moreover, if the gold price rise, since we charge the making charge on the on the value, while I would have paid a lower making charge to the carrier or vendor for getting the jewelry manufactured, let’s say around 1 lakh 10,000 or 1 lakh 20,000, I would have paid him some 4,5%. But I am instead of charging 15,16% or 1 lakh 20,000, I am charging 15,16% down 1 lakh 50,000 or 1 lakh 60,000. So due to the gold price rise, the Making charge also increases. I am not talking about the inventory again. So that has led to improvement in the margin profile from let’s say seven point.
That’s what we are saying 7.8 or up to 8%. That is one. Secondly, in chapter three the mere sales volume itself is quite high while the office remains the same. That means rental manpower, marketing and other office remain the same. The sales volume has increased. And that’s why we said that if you look at the margins in quarter three of FY, quarter three of FY 23 and 24 it was in the range of. It was in the range of 12% and 11%. So we said that you can still look 9 and half to 10% as a sustainable business margin for quarter three for the whole year 7.5 to 7.8.
So if you look the press release when the EBITDA margin for nine months is 7.8% you can take 7.8 to 8% as far as business margin is concerned and balance 2 to 2.5%. You can take it to price rise.
Mihir Shah
Got it. That. That explains. Thank you very much gentlemen. Wishing you all the very best.
Sanjay Banka
Yeah, thank you.
operator
Thank you. The next question is from the line of Bharat from MC Pro Research. Please go ahead.
Bharat
Good morning sir. Congratulations for a great set of numbers actually. So just one confirmation. You indicated that by 27 sustainable EBITDA margin for the next fiscal should be in the range of 7.5 to 7.8%. Is that correct?
Sanjay Banka
Yes, it is absolutely correct. Provided the price range remains elevated. D We are talking about the current price ranges otherwise between 7.3 to 7.5 at a elevated price level 7.5 to 7.8. So there is a gap of only 2030 basis points whichever way price moves.
Bharat
Okay. Okay. And sir, next question is what would be the level of inventory hedging that we do currently and what is the plan? So for nine months FY26. So what was the hedging proportion? What is the intention for the hedging proportion in of inventory hedging proportion in FY26 and the same for FY27. If you can provide guidance on the same. Thanks.
Suvankar Sen
We’ve been mentioning that our hedging percentage is in the range of 55 to 60% for the last six months. Nine months in the last two, three years which has been in the range of 80%. There were times when we were up at 90%. But in the last six months in this high price gold volatility there have been pressure on liquidity. There have been pressure on maintaining the margin. And in this kind of a dynamic volatile scenario, based on our prudent hedging policy and guidance, we said that let us keep it at 55 to 60%. That would ensure that we continue to focus on our business.
We continue to manage our inventory well. And also very important here to note is that the old world exchange of the consumers have also gone up. So the old gold exchange maybe two years, three years back was about 25 to 30%. But that old gold exchange today is in the range of 45 to 50%. So when the old gold exchange comes in then automatically those price risks that we always talk about is partially reduced. And keeping all those aspects in mind, we’ve also started to focus on the customer advances. With gold rate getting fixed, that itself also starts working as a hedging tool.
So keeping all of that in mind, we’ve kept our hedging ratios in the range of 55 to 60%.
Sanjay Banka
And sir, I just want to compliment here when we are saying about the hedging ratio it is only considering GML and MCF position. But this customer offer which we give, where we give a fixed offer to the customer, it is as good as the future sell position or when we give a flexible offer to the customer where the customer can go either way, those are the additional impact which we don’t get into too much detail. These are the business strategies.
Bharat
Okay, okay. But sir, roughly if we like, if you as you said like you know, fixed offer to customers also given in the way of, you know, customer advances or the, or this kind of a gold financing scheme. So what would be that proportion? So we can, you know, get a sense of how the overall hedging works.
Sanjay Banka
We don’t want to discuss those details. We are see finally these are strategic points and they are calibrated from time to time. We just want to give you a comfort that we are, we are very cognizant of the risk management. It’s a, it’s a very. The hedging policy considers the risk as well as the balance sheet. Both see what we. And it varies from company to company. Let’s say in the recent times when the, when the gold price fell by almost 10% from 5,500 to 5,000, even 4,800, the balance sheet and how much margin call would have come around 400 to 500 crore.
So it depends upon the jeweller to jeweler. So we have maintained a very fine balance between the risk management, business exigency and the balance sheet as well. I think I can leave it there that we are. We are very much cognizant this. This policy is approved by the board and our large investors are fully aligned with our risk management policies.
Bharat
Okay. Thanks for the clarification and all the best for my. Thank you.
operator
Thank you. The next question is from the line of Vijay Chauhan from Right Horizons pms. Please go ahead.
Vijay Chauhan
Thank you for the opportunity and congratulations for good set of numbers. So my question is. I have basically question on the inventory hedging level side. So that has been answered. But is there any component of inventory gain like we highlighted some less than 0.5% in quarter two. So is there any component that you can provide as a percentage?
Sanjay Banka
I’ll explain to you. See if you refer to our hedging slide in the presentation. Accounting is done based upon cost or market price, whichever is lower. That is first point. So there is no inventory gain. Inventory gain for future. That means whatever inventory lying in my balance sheet, it is at a cost price. So there is no hidden inventory gain line point 1.2 in the gold price rise. When I take my GML and NCX position there is in a hedging position it gives us a loss. So the balance is in a rising gold price. In a hedging position in any.
Send the scope of my question. In any claiming to be 100% hedged or 90% hedged, the inventory will have hedging loss and not hedging gain. Whatever gain has come, the gain has come to the P and L account. But in a rising price there will always be a loss. That loss is sitting in the inventory. So in quarter four when the price will rise, they will have a relation gain and adjusted by the inventory losses which are sitting in the inventory. You can kindly refer to my slide and it is more of an accounting issue.
Vijay Chauhan
Yes. So going ahead we. It is safe to assume that like typically the gross margin that we have around 9.9% for this quarter. So it doesn’t have any inventory component. Right.
Sanjay Banka
Nine point.
Sanjay Banka
The 9% is EBITDA margin. Gross margin is more than 15 16% .
Vijay Chauhan
we are talking 19.9 for quarter three only. So it is 19.9 for gross profit. Yeah. So it doesn’t have any component of inventory. Right.
Sanjay Banka
It has the impact of realization gain. So I am using two words. One is inventory again and relation. Relation gain means whatever inventory has been sold at a higher price in the. In the quarter three that we call relation gain. Yes, it has impact of relation gain and I. I clarified it in the Opening remark itself that 2 to 2 and a half percent for the full year on a. On a 6400 crore you can compute the number back of envelope that is on account of price rise balance out of. I’m again repeating sir, 10.8 is my EBITDA margin for nine months and out of that you can take two two and a half percent as a relation gain or inventory gain whatever you are referring to.
Similarly in quarter three the the EBITDA margin is 13.2%. You can take around 9 to 9 and 9 and half to 10% as the business margin balance you can take as the realization gain or inventory gain which you are referring to.
Vijay Chauhan
Yeah, that answers my question perfectly. The second question is on the because we are seeing lot of shift towards the low carrot products and also the stud studied item side. So can you provide some breakup of the range? Maybe let’s say the plain gold jewelry has maybe 20 making charges or some margin and maybe 30 for the capacity ratio. So is there any breakup or range that you can provide so that we understand that how the product category movement puts let’s say positive pressure on the gross margin.
Sanjay Banka
So see the gross margin is a function of own store sale and franchisee sale. And we’ve said it earlier and I’m giving you ballpark number. Let’s say from the own store we make 20% gross margin. When we make a sale to franchisee we make around 7 to 8% margin. So you can take 60%, 35% and 5% on exports and e commerce. These are the broader three areas. I’m repeating sir. 60% own store sales 30 35% franchise sale balance 4 5% the e commerce and exports. From the own store we make around 18 to 20%. From franchisee we made 7 to 8%.
From E commerce and other we make around 5%. Now within this 20% of own store I am not. I don’t want to give you the breakup so you can visit the store and understand the the jewelry making charges can vary from 6% to 25%. So if you want to go for an antique jewelry or a polka jewelry we can charge around 2425% along with discount in the respective periods.
Vijay Chauhan
Okay so these are net of discounting that this range you are referring right. 6 to 25%.
Sanjay Banka
We are the gross amounts, we are the growth amounts.
Vijay Chauhan
Okay.
Sanjay Banka
It will vary from time to time. So these are based upon market dynamics. They are based upon the competitive situation in the market and the competitive advantage. And as you are aware we are a second most trusted brand. The customers are willing to give us extra fee for the trust and faith and the comfort and the design which they get from us.
Vijay Chauhan
Thanks for the clarification and the last part on the Any guidance on the next year Store Edition.
Suvankar Sen
Next year sir, we continue to focus on 18 to 20 stores. Our focus will be that we should open more franchisee stores, you know, broadly 8 to 10 owned stores, 8 to 10 franchisees. If possible, we will open more franchises and less owned stores, but 18 to 20 stores is our next year’s guidance.
Vijay Chauhan
Okay. Thank you for all the terrific good luck for the future.
operator
Thank you. The next question is from the line of Devanshu Bansal from MK Global. Please go ahead.
Devanshu Bansal
Yes. Am I audible now?
operator
Yes sir.
Suvankar Sen
Yeah.
Devanshu Bansal
Hi. Congratulations team on good performance as well as improving franchisee interest. Sir, I wanted to understand the traction in schemes for monthly grammage that are there. Right. So typically such schemes gain good traction in times of high gold price and provide some comfort on future growth as well. However, when we see our December 25th balance sheet, the growth in customer advances is somewhat softer. Right. So what initiatives are we taking to improve onboarding of consumers under such schemes?
Suvankar Sen
December quarter three it being a dhantyra quarter, most of the consumers who have been doing their advances and savings, you know, they kind of redeem it during the festive season. So that is how you know it looks slow. But going forward with the targets in place, with the teams in place and with the communications in place, we are putting our best efforts that we continue to raise these advances back which will also help us with the cash flows and also help in the future sales that we can book. And I think that the traction of the consumer at these is that see what had happened previously two, three years back was that our advanced team was more flexible in terms of pricing.
And in the last one and a half, two years the gold prices kept on going up so the consumers felt that the savings scheme was not as useful. But now with the fixed rate option coming in, I think consumers know that they can continue to look at an EMI and fix it at various rates. We have certain Marigold for big wedding customers where if they can do some six months, 11 months kind of booking, they will get some extra benefit on the discounts of making charges on discounts. So all of that is there. I think we have our certain limit set by the Companies Act ROC and we will try to maximize and utilize as much limits that have been given from the government to raise the advances.
Devanshu Bansal
So Swankar, just a small follow up here. So currently we must be at around 200 crore of such deposits, right? First customer deposit. But from your equity perspective, I guess 500 crore can be raised through such schemes, right? 25% correct.
Sanjay Banka
You are right. We are raising the. So we are. First of all we have to take the rating. So we are taking the rating for a higher amount. Let’s say 500 crore. And when we file the this return for this purpose with ROC which will file by August, it will go up to 500 crore. And we are taking all steps to raise these funds. And we are aware that this they give us a good handle because the customer footfall increases. So we are fully, fully convenient that you would have seen that how we are promoting we are sweetening the offer without compromising on the margin.
So. So depending upon the offer, we are sweetening the offer without compromising the margin. To increase these limits, you’d see a good traction. So March 26th balance sheet you will see a higher number with customers who like to redeem during Access50 and Poila.
Devanshu Bansal
Bosha sir, last question is on the again on the balance sheet side which appears to be a bit stretched. I understand that high oil price and festive preparation would have led to increase in inventory. But this needs a strategic focus in terms of inventory optimization. So what is your thought process around in inventory optimization going into the next fiscal? Any targets? If you would like to share here.
Suvankar Sen
See we are as I mentioned before using technology, AI tools, software, data analysis. Our merchandising team is very much closely monitoring what is the exact kind of product that are selling, what are the reasons for non conversion. And based on that we will be making sure that we are keeping the right kind of products and our supply chain continues to remain strong. With the gold price going up, one has to understand that it is not just about the quantity of gold that you are keeping at the store, but it is also the exact quality of the design and the kind of product that you are keeping it.
So we will not want to increase and unnecessary stocks. We are analyzing on those stocks which are not selling beyond a certain number of days and we are focusing on recycling it and fulfilling those stocks which are selling. So we are doing a very scientific approach across the country and we will ensure that all the number of days of inventory that we have, it does not unnecessarily increase because of the gold price going up, but it remains under control.
Devanshu Bansal
So just a small feedback here Suvanka. So I take your point that you’re taking strategic actions. One, if you could Provide some guidance around the number of days of reduction that we are targeting going ahead into the coming fiscal would be very helpful to sort of better track your performance on inventory optimization.
Sanjay Banka
We are not targeting any reduction as such, so we have clarified it earlier. Also targeting reduction is an outcome. What we are targeting is improving the efficiency of inventory sales across all stores across our portfolio in east and north and west. Right. And you are aware that there are always regional disparities between the various zones and the pricing. So if you ask me state question, we are certainly looking at improving inventory efficiency. We are looking at shuffling out slow moving inventory. We have also seen as the trend is changing that the high weight inventory which has been prepared and which is not selling, we will take a call.
So you will certainly see an outcome which will be in terms of number of days. What we are constantly working is inventory optimization. So the answer is that we are looking at this thing and it will depend upon market dynamics. What you are seeing inventory there is the value, the quantity of inventory remains the same. What inventory quantity per store was there two years back. It remains the same. Now.
Devanshu Bansal
That I was sort of indicating is that if the focus is on lightweight jewelry, lower carriage jewelry, then in KG terms also at a personal level, that should see some reduction. Right. So that was the limited point. But I can take this offline maybe for the participants to take the questions here.
Sanjay Banka
Yes, yes, yes. Thank you.
Suvankar Sen
Thank you.
operator
Thank you. The next question is from the line of Rupesh from Long Equity Partners. Please go ahead.
Rupesh Tatiya
Hello sir. Thank you for the opportunity and congratulations on a very good set of numbers. First, first question Sir. Is this 200 odd stores we have. Can you give rough split in terms of, you know, mature stores, new stores, maybe in between stores. What is what kind of annual revenue they are doing, what kind of margins they are doing, what kind of same same store sales growth they are doing? Some split would be very helpful.
Sanjay Banka
So basically rupees, if you look at the, the definition we. When we say same stores for the current year, that means stores set up prior to April 24th. So in the last two years you can take around 40 stores which are the new store. Right? Around 40 number own and franchises taken together out of 196 store 1, 56 are old stores, 2 number here and there 40 are new stores. Now obviously as you have said that when you look at the return on equity, the blended return on equity which had come down due to the IPO fund infusion and subsequently to the qip, my existing store. So the ssg, SSG means the growth of old stores which have. Which are around 155 or 156. That number we have given is what 21% right out of 30% growth. 70 I. I have always said the SSG growth is 70% of total growth.
So if it is. If the total growth is 20% SSD is 14%. If the total growth is 30% SSG is around. SSG is around 21%. In the quarter three the SSG growth is around 21%. Out of here of SSD growth around how much? 39 in Q3. But this is misnomer because in quarter three the growth itself is 50%. So from the 50% we can look at that. I am mostly referring to the YTD number. So the growth is there. Now out of that you would be happy to know that we have got around 8 to 9 store which have crossed 100 crore mark.
So we are constantly looking at increasing the store turnover. So we are not looking at this 20% SSD. Our target is clearly to take all the stores to 100 to 150 crore level. The new store which we set up in the first year they give a revenue of 18 to 20 crores. But I think these are too much details. So obviously a new store takes time to mature. The maturity speed is momentum in higher in east and slightly slower in other markets.
Rupesh Tatiya
Okay. The second question sir is non east was roughly 1100 crore. So that is nine month number I assume. And then where. Where do you see this non east in FY27.
Suvankar Sen
So see the growth rate that we are seeing in the non east market is as much as maybe a little higher than that of the east market because the base is lower. So we are continuously looking at 25 30% growth in the non east market while an 18 to 20% growth in the east market. So this is how one has to look at the overall numbers.
Rupesh Tatiya
This number can go to let’s say. 2000 crore in FY27.
Sanjay Banka
At least, at least around 1500 to 1600 crores of the farms. But maybe. So we have to recheck the number for FY FY27 but 1700 clearly. I see. Well let’s say if it is around 1300. 1300 into 30.
Rupesh Tatiya
Okay. Okay. And sir, I mean you talked about this realization gain of 33 and a half percent in Q3 2.5% in 9 months of this year. If, if. I mean for whatever reason let’s say gold prices go down from let’s say $5,000 to $4,000. We what kind of realization loss can we see and then which this 7%, 7 to 8% margin guidance number you give if there is a realization loss, can. Can the margin be something like 5%? Or. Or I mean can you just explain that if. If what happens to the realization gain. Or loss.
Suvankar Sen
The EBITDA EBITA shall continue to remain between 7.2 to 7.8%. This kind of price fall if it happens. I think based on our prudent hedging policy, today our hedging is at 55 to 60% and then the hedging percentage will go up to 75 to 80%. So in this kind of sudden price fall as you are expecting to happen then we will accordingly our treasury team will take the call and will manage the situation accordingly. So I think our EBITDA historically over the last four, five years have continued to remain between 7 to 8% and we will continue to make sure it remains between 7 to 8%.
Rupesh Tatiya
Okay. Okay. That is good to know sir. And final question sir is you said that studded ratio is not the only high value business. There are some other parts of the business which are also high value like antique jewelry. So on nine month basis, whatever 8080500 crore revenue we have, can you split it between let’s say regular regular business and a high value addition business?
Suvankar Sen
I’ll tell you as Bankaji said that the higher margins comes from one is diamond studded jewelry, gemstone jewelry, antique jewellery and also very lightweight jewelry. Where if we are creating very nice, beautiful, lightweight designs within the budget of the consumers, whether it be in, you know, 18 karat, 14 karat or 9 carat international designs, there also the consumer is willing to pay a 1 to 5 higher making charges because of the design. So when it comes to lower making charge items which are mostly standard machine made items, those are the ones which brings down the overall making charge scenario.
But the moment it is exclusive, handcrafted, very modern, then the premium list goes up by 1,2%. So. So I don’t think we will be comfortable to share the ratio of what is premium, what is not premium. Those are strategic in nature. But leave on us that our forte is to create lightweight jewelry and cater to the needs of the consumer. And for that if it is jewelry within 50,000, a consumer is willing to pay 50,000. But if that makes that 1% higher making charge and it’s a great design, they’ll be happy to do so. So that’s how it is.
I must mention to you that our ATV this year has gone up to about 90,000 rupees. So gold prices are going up now. 90,000 rupees in today’s day and time is what, 5 to 6 grams. So we’ve been the masters of creating lightweight, affordable jewellery of various ranges. So that is our USP and that is what is helping us to grow in these challenging uncertain markets.
Rupesh Tatiya
So I get all of that sir, but that is the right metric to track. I mean this student ratio is a incomplete metric to understand how the business is moving to a higher value addition. So I would request you if you can find some way to figure out to share this number because that is the right metric to track to the business.
Suvankar Sen
Keep the point in mind and see what can be done.
operator
Thank you. The next question is from the line of Raj Sara from Finvestors. Please go ahead.
Raj Saraf
Yeah, am I audible?
Sanjay Banka
Yes Raji, you are audible.
Raj Saraf
Sir.
Sanjay Banka
Yes, you are audible. You are audible.
Raj Saraf
Yeah. So very congratulations for this stellar set of numbers. So though you replied but I want some more color on that. The, the rapid gold price fluctuation which occurred in Q4 all the way from almost 4, $500 to $5,500 and then again sudden drop to $4,400 and now settling around $5,000. So realization losses, how much that can be and how that is managed.
Suvankar Sen
So, so I just tell you that this sudden volatile price movement happened for a matter of seven to ten days only. Right? So therefore it has not been of that much of a great impact in terms of overall purchase and average rate of procurement and rate of sales. It has just created a lot of turbulence in our hedging action. I would say because there was a time and we all part of the market have faced it that every day based on your hedging percentage because you are on the sell side and the prices are going up, you are being having calls on mark to market and that based on every day your sales are happening to a certain extent and the mark to market calls are of a difference.
So it created a lot of those seven, 10 days was very much volatile and not a very comfortable situation. But to assure you that this sudden movement up and sudden movement down is not something that has created that much of an impact. It is the continuous movement up which has been the one which is creating impact and creating those extra 2 and a half 3% profit for gold price rise. And this current movement has not been of that much of a great impact.
Raj Saraf
Okay sir. And sir, while I’m going through the last three, four years Results, quarterly results. So what I found that we are having a substantially higher operating or a bitter margin in Q3. And that is north of always more than 10% to be precise, more than 11%. So just on steady gold price, just, just let assume a scenario. When the gold price next year settle at the same price, which is right now. So in that case, what is actually our margins in Q3?
Sanjay Banka
The margin in Q3, as we said that my sustainable business margin is 7.5 to 7.8. In Q3 the sales are usually substantially higher. And hence in Q3 since the sale is higher, gross margin absolute amount is higher and hence margin percentage looks higher at around nine and nine to nine and a half percent. It can go up to 10%. Also if let’s say next year gold price remain the same and if the sales grow by 60% then my opex remains the same. OPEX will be let’s say 1,200crore in one quarter. And let’s say. I’m just giving you ballpark number.
4,000 crore. 4,000 crore. 20%. 800 crore. 800 crore. Minus 200 crore. 600 crore. Then 600 crore upon 4,000 crore, 15% will be, will be the EBITDA margin without doing anything. So if the sales are higher, absolute EBITDA margin becomes extremely high.
Raj Saraf
Okay, so it is just the, you see operating leverage when we sell.
Sanjay Banka
Yeah, that’s what we clarified. Yeah, exactly. That is exactly the operating leverage which comes into full play in Q3 and Q1.
Raj Saraf
Okay. And while Q1.
Sanjay Banka
Sorry.
Raj Saraf
Yeah, sorry.
Sanjay Banka
So while these are the figures of Q3 and Q1, we still look at conservative EBITDA margin of 7.5 to 7.8 for the whole year. Which means that if I am looking at 10 or 11% in Q3, it can be lesser in Q4. So that you full year blended EBITDA margin of 7.5 to 7.8. And that is not a quarter on quarter variation. I hope that clarifies. Sir.
Raj Saraf
Yeah, let’s clarify, sir. Just wanted to confirm sir. On steady, steady gold prices, what is our gross margins EBITDA margin? You already talked about, what is our gross margin at steady gold prices?
Sanjay Banka
15 to 16%. That you can take 15.5 to 16 or you can take 15 to 15.5. And our intent is to improve it with a higher stud ratio and operating leverage.
Raj Saraf
Yeah,
Sanjay Banka
we have not compromised on our, we have not compromised on our making charge so far. And if you look look at comparative numbers for the industry, it remains to. Be superior and superlative
Raj Saraf
okay, the north of 15% you said, sir.
Sanjay Banka
Yeah, yeah, yeah.
Raj Saraf
And sir, with rising gold prices now, gold prices has been like 5,000. So what is the traction in the business right now? You are seeing the footfalls and any, any effect, negative effect actually I’m reading, I’m just wanted to rule out from you from your side.
Suvankar Sen
So you are talking about the gold price rise and its impact on the consumer. So the negative effect, if you may say is that people are looking for jewelry which is of lower weight so that it is as per the budget of the consumer. So see what’s happening is gold price has gone up by 65, 70%. But the consumer’s budget has not gone up by 65, 70%. It has gone up by say 20, 25%. So that is where we need to make sure that how we can reduce the gold weight or make the purity of the product lower, that is number one.
Number two is that old gold exchange has gone up because consumers do not have so much of liquidity to buy with their liquid money. So they are utilizing the old gold. And that is also a very strong part of our strategy. And I think it’s a strategy for the industry also how we can utilize and recycle the old gold lying in the households. So that is also another thing that will keep the industry moving forward and make sure that we continue to sell our new products and new designs and serve the customer. Third is, yes, there are some consumers who are sitting on the sidelines on the fence at these high gold prices.
People are thinking, what is the point of going to the jewelry store? What can I buy? And it is for them that we have to come with 9 carat or 14 karat lightweight gold and diamond jewelry that is within their budget or even look at other options and make those customers buy. So footfalls, like I said, the volumes have gone down 10% for the whole year, 3% for just water footfalls. Also if I look and analyze it has compared to the previous year come down by 10, 15%. So it is lesser footfalls. But those customers who are buying is buying a little more jewelry or the prices are making them buy more jewelry and that’s how the business is going on.
Raj Saraf
Okay, so that helps. And the final question is you are still looking at 25% year on year growth in the Q4.
Suvankar Sen
Yes.
Raj Saraf
Is it correct, sir?
Suvankar Sen
Correct very much.
Raj Saraf
Okay, thank you very much sir and best of luck for future endeavors. Thank you very much.
Suvankar Sen
Thank you.
operator
Thank you. The next question is from the line of Pallavi An Individual investor. Please go ahead.
Unidentified Participant
Yes, Pallavi from Samikshan. I just wanted to understand what would be our gross margin guidance for 4Q given that we have. I think inventory disclosed in the presentation. Cost is 13,500 approx. And gold is at above 150.
Sanjay Banka
Good morning. Sorry I missed your question. Can you kindly repeat?
Unidentified Participant
Yeah. Thank you for sharing in your presentation. First the average cost for gold. And I think you’ve given it 11,500 in 2q 13,500 in 3q. So based on that data point 4q also we should see some 150 basis point of realization gain. Would that be a fair assumption in the gross margin?
Sanjay Banka
No, we don’t want to comment on relation gain for Q4. It is all a function of how much price is volatile. In quarter four we have seen only 45 days where the prices were very high. Obviously there. There will be or would have been relaxing gain in 50 in the first 20 days. Right after that the prices have come down. So let’s entire. Let’s entire quarter span out and then only we can. I don’t want to make any conjecture on the rest of 45 days. As you said, this is a function of the market prices, market factors and also accounting classification of the prices, losses, gains and losses adjusted to PNL account, inventory and OCI account.
But once again we reiterate sustainable EBITDA margin of 77 and half to 7.8%. 20 basis points here and there.
Unidentified Participant
Right. My second question would be for assuming if we take a call probably by the end of. By end of folklore that gold prices are likely to stay at similar level for the whole of next year. No decline, no increase. So in that situation we will increase our hedging ratio to back to 80 90%. Is my understanding correct, sir?
Suvankar Sen
Yes. Yes, madam. If the gold price are in a downward trend and all there is an amount of stability and our balance sheet and liquidity is allowing us we will go back to 80, 90%. But till that time it will range between 55, 60, 65 till that stability is achieved.
Unidentified Participant
So our hedging ratio, just to confirm this is just dependent on the. Once we get stability we take it up so that the margin requirement doesn’t fluctuate. It’s not even about the decline. It will be more about. The call will be based on stability.
Suvankar Sen
Ability. Exactly, ma’. Am. Right now it is not at all in a stable situation.
Unidentified Participant
Right, sir. Thank you, sir.
operator
Thank you. The next question is from the line of Jinesh, an individual investor. Please go ahead Hi sir.
Unidentified Participant
Is my voice audible?
operator
Yes, yes, yes.
Unidentified Participant
Congratulations sir for a great shot of numbers and amazing ppt. Just one question from my end. What is our question? Current hedging policy as on date, how much percentage are we hedged as on date?
Sanjay Banka
We already explained this question earlier. No, I think repeated questions are coming on the same subject. Okay, so. So we. I you kindly refer to our slide. We are saying that it’s a board approved policy. It’s a prudent policy. We are. This says minimum 50 has to be has. We have during this quarter also we maintain hedging in the range of 55 to 60. And due to the elevated gold price, working capital challenges, margin calls, we will remain in this range. And as Paluji asked from Saviksha that if the gold prices are stable or if it falls we can again take it to 85 to 90%. But at the current elevated pressure due to working capital challenges it will remain in the range of 50 60% and it’s a board approved policy.
Unidentified Participant
Yeah. Thank you sir. That’s what my question was. Thank you.
operator
Thank you. The next question is from the line of Sonal from Prescient capital. Please go ahead.
Sonal Minhas
Hello. Hi sir, this is Sonal Minaz. I hope I’m audible.
Sanjay Banka
Yes, yes, yes.
Sonal Minhas
Okay. Sir, I wanted to understand from a. Disclosure perspective you’ve given sales realization. You’ve given your top line in crores. Just back calculating some numbers in terms of volume of items sold or let’s say grammar or tonnage of whatever gold sold, is it fair to assume that the volume is flat yoy for nine months if we measure it in terms of tons of gold. If you measure it in terms of let’s say items sold. I want to. Understand the volume growth. Basically for nine months I want to understand volume growth.
Suvankar Sen
So the volume as I. As I mentioned the volume degrowth in. Quarter three was minus 3% like quarter on quarter and for the whole nine months if you look at it it is minus 10% that is for gold and for diamonds if you look at just diamonds as a. As a product then it is up by 12 and a half percent for the nine months that these are all.
Sonal Minhas
So how do you measure volume? Is it in terms of grammage of gold or is it in terms of items sold? Basically
Suvankar Sen
no, no. Grammat grammage. We are measuring in terms of
Sonal Minhas
grammatical gold.
Sanjay Banka
I will. I will like to add here that India import of gold remains at 800 tons. 800. 850 tonnes for last 10 years. And the jewelry consumption remains in the range of 450 to 500 tons for last 10 years. And the jewelry market size has increased from 30 billion to 120 billion almost sometimes. So volume is not a factor in jewelry industry. People don’t consume jewelry by volume but by value. So there is a high possibility that even for next year and if the gold prices again rises by 50, 60%, you will not see any volume because customer budget will not increase the 50, 60%. So he will end up buying a low weight jewelry, low carrot jewelry.
He will. He may go for a silver jewelry with diamond. He can go for a smaller size jewelry to maintain his pocket size. But we will continue to go by to grow by 20 to 25% and so on depending upon our SSG as well.
Sonal Minhas
Got it. Thanks for explaining. Thank you. That is from my side. Thank you.
Suvankar Sen
Thank you.
operator
The next question is from the line of Abhijit from antique stock broken. Please go ahead.
Abhijeet Kundu
Hi sir. Thanks for the opportunity and congrats on. A very strong set of numbers. So my first question was on in the staff course you said that there was about six and a half crores of impact from the new labor code.Right?
Sanjay Banka
Correct. Correct.
Abhijeet Kundu
And that has not been separately shown. It’s basically a part of the stock course. So we have to separate it and look at the margin.
Sanjay Banka
Yeah, yeah.
Abhijeet Kundu
These are one time. Because the impact will be far lower in the forthcoming quarters.
Sanjay Banka
Yeah, yeah, correct. This is. Impact will be. Will not be substantial as you’ve seen in other companies. Because we have. We have. The labor code has come around five, six years back. We have been aligning and calibrating our structure of the cost for own staff as well as third party. We have been preparing ourselves for a long time. And as we said, no. We are employer of choice. We are a great place to work. Our focus is for social value addition. So we’ve been preparing ourselves on those lines.
Abhijeet Kundu
Okay. So the staff cost during the quarter should be about 47 crores, 469 million. If we remove the six and a half crores from that. That is one. And if I then look at the. Fourth quarter and for I’m, you know. For the year as a whole, EBITDA. Margin still would be at about. Even if we cut it down, it will be still at about 10% for the year. Correct me if I’m, you know, substantially wrong.
Sanjay Banka
Very correct. Correct. See. No, no. So we have given this number EBITDA margin for the whole. For. For the nine months. Right, right. So for the nine months.
Vijay Chauhan
For the. Full year also, even if we don’t. Have a great fourth quarter in terms of margin, you know. So nine month margin is 10.8. So that should easily the full year margin also should be around that.
Suvankar Sen
Then. See in terms of overall numbers, even if we have been guiding that our EBITDA sustainable EBITDA is 7.5 to 7.8. So that is what we will keep guiding. But with all these numbers and situations and what we were discussed then the. Plus, what you can add certain pluses to it. But yes, a sustainable EBITDA margin of Our guidance is 7.5 to 7.8. We will not comment more than that.
Abhijeet Kundu
Yeah, right, that I agree. So I was just working around the figures and coming to. I mean this year would be a. Extraordinary year in terms of margin.
Sanjay Banka
Yeah, yeah. This is A, this is an external B and that’s why we, this is, we are so that, so that’s what we are saying that quarter four is still 45 days are pending. Next year we have given guidance of 7.5 to 7.8. Right. This year so far has been very good.
Abhijeet Kundu
Got it. Thanks. Thanks. Thanks for that. That’s it for myself.
Sanjay Banka
Thank you.
operator
Thank you. The next question is from the line of Venkat from mit. Please go ahead.
Omkar Hadkar
Hi sir, this is Omkar from Mirabilis. Just one question on Bellora. How do we see the integration over. The next one year or two in. Terms of the stores that will be acquired? Any color on the store economics and. The profitability of those stores will help.
Suvankar Sen
See, we will have a separate, you know, once the full acquisition is in place, we will have a separate call with the analyst with the strategy. But broadly speaking we just want to tell you that, you know, senco being a 88 year old brand and over four generations we’ve been serving customers. So Melora is one of our, one of the many strategies that we have to connect with the Gen Z millennial young generation customers. If you look at it, our average ticket size even in the traditional Senco business that we have is in the range of 80 to 90,000, which is 6 to 7 grams of today’s date and time.
So therefore this will only add to the portfolio of design centric and catering to the young generation. And that is how it is. And then we will, once the full acquisition is in place, currently it is the board’s approval that has come in place and the final thing is still pending. So we’ll have a separate analyst call and share our ideas in detail.
Omkar Hadkar
Sure. Thank you. Thank you sir.
operator
Thank you ladies and gentlemen. That was the Last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.
Suvankar Sen
Yes, thank you very much all my investors and well wishers. And every quarter the questions that all of you keep putting on us makes us think about it and formulate our strategies and how we can perform better. Once again, gratitude to the team that this particular quarter three has been a milestone historical quarter. This year has been historical as was saying that with the gold prices moving up in a way that has not been seen before, we are in the middle of history taking place. And I think that as a growing company our focus is how we can keep growing, keep producing designs and products that we can serve the customer in these times also.
And to reach out to the tier 234 towns and cities, one thing in the whole scenario we must remember macroeconomically that still the play of unorganized to organize continues to happen. The more these coal price volatility comes in, more the regulation comes in. Just to inform all of you, government is thinking of how to make hallmarking much more stronger. Traceability will be a key factor going forward. So compliances, rules, regulations, systematic thinking, data analysis, these all will become very, very critical for the business to grow in the future. And I think that we at Senco Gold and Diamond are amongst the few dwellers in the country who are preparing ourselves and poised to grow with penetrating into the smaller towns of the country also.
So thank you very much and hope to connect with you all again in the next quarter. Thank you and happy Valentine’s Day. Thank you.
operator
Thank you. On behalf of Asian market securities. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.