S H Kelkar rises after strong Q2 business update

S H Kelkar and Company rose 2.55% to Rs 84.50 after the company said it witnessed a healthy uptick in demand and enquiries across domestic and international markets during Q2 September 2020.

"Engagements across customer base remained solid during the period under review, especially with mid and large sized FMCG customers. In addition, new business wins across various categories remained strong, laying a good foundation for multi-year growth of the Company. On a consolidated basis, sales in Q2 FY21 stood at about Rs 310 crore. Further, the raw material situation continued to remain stable during the quarter," the company said.

On the balance sheet front, S H Kelkar (SHK)'s net debt position stood at around Rs 385 crore. This is following the payment of the second and final tranche of the Creative Flavors and Fragrances (CFF) acquisition of about Rs 141 crore. Excluding the payment made for the acquisition, the net debt position was steady at Rs 244 crore.

Going forward, the company said it has no major capex plans on hand and the focus remains on sweating current investments & generating strong cash flow from operations. On the whole, the company remains confident that the net debt position by FY 2020-21-end would be at similar levels to that of FY 2019-20, which is around Rs 300 crore.

The company continues to monitor the macro-demand situation and remains confident of its growth prospects over the longer term in a normalized operating environment.

On 28 July 2020, SHK through its Italian subsidiary concluded the acquisition of the remaining 49% equity stake in CFF, which is now a 100% wholly-owned subsidiary of SHK. CFF delivered an encouraging performance during the quarter ended 30 September 2020 on the back of increasing demand and volume off-take in the Italian market during the period under review.

S H Kelkar and Company consolidated net profit dropped 21.9% to Rs 14.82 crore on a 29.5% decline in net sales to Rs 191.39 crore in Q1 June 2020 over Q1 June 2019.

S H Kelkar and Company is a fragrance and flavors manufacturing company based in India. The firm is engaged in offering fragrances in various categories, such as personal care, hair care, skincare and cosmetics, fabric care, household products and fine fragrances.

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