S H Kelkar & Co. Q1 FY27 Results (NSE: SHK)
Signal: Margin pressure
The read
Consolidated PAT of ₹45.43 Cr is boosted by a ₹29.95 Cr exceptional insurance claim; underlying operating profit (ex-exceptional) declined ~39% YoY as OPM contracted 360bps — the 6th consecutive quarter of margin compression — with raw material costs and depreciation absorbing revenue gains.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹662.42 Cr | 14.1% | 2.0% |
| EBIT | ₹53.57 Cr | 82.6% | |
| Net profit | ₹45.43 Cr | 77.8% | |
| EPS | ₹3.28 | 77.3% | |
| EBIT margin | 10.35% |
P&L walk
Revenue growth of 14.1% YoY was driven entirely by Flavours (+63.3%) while Fragrance grew only 7.4%; operating margin compressed 360bps YoY to 10.35% as raw material cost surged 590bps to 55.1% of revenue, employee costs rose 130bps, and depreciation jumped +33%; PAT of ₹45.43 Cr is inflated by a ₹29.95 Cr exceptional insurance claim.
Segments
Flavours segment was the growth engine (+63.3% YoY revenue, segment result +162% YoY), while Fragrance grew only 7.4% and held segment PBIT broadly flat. Group's operating margin pressure emanates from Fragrance, where raw material and fixed costs are concentrated.
Key positives
- Flavours segment revenue surged 63.3% YoY to ₹111.98 Cr, indicating strong demand recovery or market share gain.
- Consolidated PAT up 77.8% YoY to ₹45.43 Cr, aided by ₹29.95 Cr exceptional insurance receipt.
- Consolidated revenue grew 14.1% YoY to ₹662.42 Cr, marking acceleration from prior quarters.
- Board approved divestment of non-core Keva Ventures, streamlining focus.
Key concerns
- Consolidated OPM contracted 360bps YoY to 10.35% — 6th consecutive quarter of margin compression.
- Raw material cost % of revenue rose ~590bps YoY to 55.1%, indicating input cost headwind not fully passed through.
- Standalone revenue flat (-0.6% YoY) and standalone operating loss (ex-exceptional) of ~₹14.74 Cr show parent weak.
- Employee costs grew 25.6% YoY, well ahead of revenue growth, absorbing operating leverage.
- Exceptional items (₹29.95 Cr) mask weak underlying profitability; ex-exceptional PAT down ~39% YoY.
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