Senco's hedging ratio fell below its own floor. FY27 margins will halve.
Record profit of ₹574 cr masks a hedging breach and a sharp margin reset. The old gold exchange now drives half of quarterly sales.
— 4 earlier stories on Senco Gold Ltd. →What's new
- FY26 was record-breaking with consolidated revenue of ₹8,430 cr and net profit of ₹574 cr.
- The old gold exchange program hit 50% of quarterly revenue; the hedging ratio fell below the board-mandated 50% minimum.
- FY27 guidance is 18-20% revenue growth and a 7.5-7.8% EBITDA margin, down from an exceptional 11.5% in FY26.
Why this matters
The call frames FY26 as a peak-profit year, not the new baseline. The margin reset to 7.5-7.8% is the real story; the hedging breach suggests the treasury function was caught wrong-footed. The inventory gain is a one-time tailwind that will mask the underlying margin compression for two quarters.
What we're watching
- How quickly the hedging ratio is restored to the 50% floor.
- The actual EBITDA margin in Q1-Q2 as the customs duty inventory gain flows through.
- Whether demand softens further after the PM's appeal on gold imports.
The full read
Senco Gold just posted a record year. Revenue hit ₹8,430 cr, up 33%, and net profit reached ₹574 cr. But the transcript shows the profit peak is behind it. Management guided FY27 EBITDA margins to 7.5-7.8%, down from an exceptional 11.5% in FY26. The customs duty hike will deliver a ~₹400 cr inventory gain over two quarters, masking the underlying compression. More troubling, the company's hedging ratio fell below its own 50% board-mandated minimum during this record profit quarter, suggesting the treasury was not prepared for the scale of operations. The old gold exchange now makes up 50% of quarterly sales, a great loyalty driver but a headwind for new-jewelry growth. FY27 revenue guidance of 18-20% is a step down from 33%. Demand already softened in late May after the PM's appeal. The story is shifting from a record year to a margin reset.
Questions answered
- Why did Senco's hedging ratio fall below the 50% minimum?
- The filing does not state the reason, only that the ratio breached the board-mandated floor during a record profit quarter. This implies the company's hedging position did not keep pace with its inventory or sales volume.
- How big is the customs duty inventory gain, and when does it hit?
- Senco estimates a gain of roughly ₹400 cr over the next two quarters. This is a one-time windfall from the duty hike to 15% on existing stock, and it will temporarily inflate margins.
- Is the 18-20% FY27 revenue growth target ambitious?
- It follows a 33% growth year. The target appears conservative, especially with management noting demand slowed in late May after the PM's appeal on imports.
- What does the 50% old gold exchange ratio mean for the business?
- Half of quarterly revenue now comes from exchanging old gold for new. This boosts customer loyalty but can pressure revenue growth and margins if new jewelry sales don't grow proportionally.
- Should the EBITDA margin guidance concern investors?
- Yes. The guided 7.5-7.8% margin is a roughly 400 bps drop from FY26's exceptional 11.5%. It signals that last year's profitability was not sustainable.
Story so far
All notes on SENCO →- 2 Jun 2026 · 5:23 PM IST Senco's hedging ratio fell below its own floor. FY27 margins will halve.
- 7d ago Senco Gold reports record FY26 revenue as margins face pressure
- 8d ago Senco Gold confirms Q4 results as growth hits 45%
- 8d ago Senco Gold confirms FY26 results with no material surprises
- 8d ago Senco Gold posts 260% profit surge and buys into Melorra