MOSL: S H KELKAR AND CO. (Buy)-Volume recovery leads to a strong quarter
S H Kelkar and Co.: Volume recovery leads to a strong quarter
(SHKL IN, Mkt Cap USD0.6b, CMP INR289, TP INR343, 19% Upside, Buy)
- Robust performance led by a recovery in FMCG growth trend: SHKL’s revenue increased 13.5% YoY to INR2,831m (est. of INR2,551m) in 3QFY18 (22% YoY growth post netting off GST from the base quarter). Fragrance business reported growth of 16.5% YoY to INR2,546m, while Flavors business reported de-growth of 8.4% YoY to INR272m. EBITDA rose 46% YoY to INR576m (est. of INR459m post excise adjustment), with the margin expanding by 440bp YoY to 20.3% (est. of 18% post excise adjustment). Gross margin contracted sharply by 600bp YoY to 46.1%, while other expenses declined 180bp YoY to 14.1% of sales. Fragrance PBIT margin came in at 15.5% (v/s 13.6% in 3QFY17), while Flavors PBIT margin stood at 25.5% (v/s 30.8% in 3QFY17). Consequently, adj. PAT grew 33% to INR338m (est. of INR286m post excise adjustment) from INR254m in the year-ago period.
- Strategy to strengthen fine fragrance presence in Europe: SHKL launched its first collection of perfumes from the recently established fine fragrance development center in Amsterdam. The company also acquired Italy-based Creative Flavors & Fragrances (CFF), which has a strong presence in fine fragrance and fabric in Italy. With the acquisition, SHKL has now strengthened its presence in Europe with facilities in Milan and Amsterdam, and is well on track to achieve its target of ~10% revenue contribution from fine fragrances over three years (as of now, it contributes 2% of Fragrance revenue).
S H Kelkar and Company Limited is an India-based fragrance and flavors manufacturing company. The Company is engaged in offering fragrances in various categories, such as personal care, hair care, skincare and cosmetics, fabric care, household products and fine fragrances. The Company offers flavors in various categories, such as dairy products, beverages, confectionery, bakery products and pharmaceuticals. It also offers a range of services, which include bio technology research service, cosmetic research service, cosmetic testing laboratory and custom synthesis services.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.