MOSL: S H KELKAR AND CO. (Buy)-Revenue in line-Miss on margins owing to one-time cost
S H KELKAR AND CO.: Revenue in line; Miss on margins owing to one-time cost
(SHKL IN, Mkt Cap USD0.3b, CMP INR128, TP INR154, 20% Upside, Buy)
- Revenue growth in line: 2QFY20 revenues declined 2% YoY to INR2,793m (v/s est. INR2,873m) on subdued demand in the domestic market. EBIDTA stood at INR383m (v/s est. INR503m), up 1% YoY. EBITDA margins expanded 45bp YoY to 13.7% (v/s est. 17.5%). One-time organizational restructuring cost of INR40m impacted margins. PBT declined 44% YoY to INR186m. Adj. PAT was down 46% YoY to INR154m (v/s est. INR245m).
- 1HFY20 performance: For 1HFY20, revenue/EBITDA/adj. PAT came in at +6%/+18%/-28% YoY to INR5,537m/INR846m/INR339m.
- Fragrances biz. flat; Flavors biz. declines significantly: Fragrances business was flat YoY at INR2,550m (+5% QoQ); overseas business saw strong traction (up 15% YoY) while the domestic business remained subdued (down 6% YoY). Flavors business declined 25% YoY (-24% QoQ) to INR212m due to decline in the domestic business (down 54% YoY).
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.
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