SHKNSEQ4 & FY26May 21, 2026

S H Kelkar and Company Limited

8,721words

72turns

5analyst exchanges

0executives

Key numbers — 40 extracted

rs,

rofile over time. As these capabilities mature, they will enhance our global relevance with customers, support higher quality, higher margin growth, and strengthen the company's position across key inte

INR 35 crore

tion. You would have noticed that during the quarter, we reported a one-off sale of approximately INR 35 crores of low-margin products as part of our ongoing portfolio optimization exercise. Q4 & FY 2026 Ea

Rs. 83 crore

the balance sheet, and reducing debt. From a profitability perspective, adjusted EBITDA stood at Rs. 83 crores, with margins at 13.5%, remaining steady on a sequential basis. As highlighted earlier, the op

13.5%

debt. From a profitability perspective, adjusted EBITDA stood at Rs. 83 crores, with margins at 13.5%, remaining steady on a sequential basis. As highlighted earlier, the operating environment remain

Rs. 350 crore

am Gandhi from Discovery Capital. Riddhesh Ram Gandhi: Yes, Hi Sir, you know, we have done about Rs. 350 crore of the capex in the last few years. You know, and despite actually all of this at the EBITDA level

Rs. 70 crore

on stream this year and the US which came on stream last year. So, three centres which is almost Rs. 70 crore, to Rs. 80 crore of cost per year in opex are also of the nature of capex and they will start gene

Rs. 80 crore

year and the US which came on stream last year. So, three centres which is almost Rs. 70 crore, to Rs. 80 crore of cost per year in opex are also of the nature of capex and they will start generating revenue af

Rs. 85 crore

Agrawal: It is roughly when you look at all these three combined in the range of Rs. 80 crore to Rs. 85 crore annually. Kedar Vaze: I would say the investments are to the tune of Rs. 80 crore to Rs. 85 cro

Rs. 200 crore

know, so if we add up the let us say Rs. 350 crore of the capex and let us say another, let us say Rs. 200 crore of operating losses which we are saying should be counted as opex, we are talking about Rs. 500 cr

Rs. 500 crore

200 crore of operating losses which we are saying should be counted as opex, we are talking about Rs. 500 crore, Rs. 600 crore of investment here. I am assuming on the Rs. 500 crore, to Rs. 600 crore our intern

Rs. 600 crore

perating losses which we are saying should be counted as opex, we are talking about Rs. 500 crore, Rs. 600 crore of investment here. I am assuming on the Rs. 500 crore, to Rs. 600 crore our internal hurdle rates

18%

uming on the Rs. 500 crore, to Rs. 600 crore our internal hurdle rates would be to make at least a 18% to 20% return on equity on that investment over and above how much historically our business has b

Guidance — 20 items

Jagdish Agrawal

opening

“Despite this backdrop, the quarterly and annual results we shared last Friday reflect a performance that has remained broadly in line with our stated guidance.”

Kedar Vaze

“Did we anticipate how hard it would be because obviously in these older markets it is also hard to break into these clients, right?”

Kedar Vaze

“So, Q4 & FY 2026 Earnings Conference Call this is the part where we have got a temporary setback when we will be able to build up our factories back this year and be ready to go again.”

Kedar Vaze

“And just further, is there any, like, a guidance you can give us for the year ahead?”

Kedar Vaze

“And do we expect the margins at least going forward to now slightly, like, normalize towards the teens, low teens at least?”

Kedar Vaze

“And this we expect to happen this year itself?”

Kedar Vaze

“Yes, I think we will reach there quickly.”

Henil Bagadia

“Pretty much across the Board, there is inflation in operations, in power and fuel, and we expect further inflation on these operating parameters.”

Henil Bagadia

“And given that we have actually added almost the same capacity that we are operating right now, which geographies in Europe, the countries that you plan to as a new entry and secondly as increase in the penetration?”

Kedar Vaze

“I believe for the first half, we will be able to maintain this margin.”

Risks & concerns — 15 flagged

PAT performance during the year was impacted by a higher effective tax rate at the consolidated level, reflecting the impact of losses in few subsidiaries.

— Jagdish Agrawal

Riddhesh Ram Gandhi: But is there a risk that this does not play out as per our plan or, or I mean is the traction which we are seeing and the response which we are seeing, are we on track, are we slightly behind schedule?

— Kedar Vaze

I think this is a very, I would say, difficult question to answer.

— Kedar Vaze

We are faced with an uncertain future on what is the raw material supply situation, what is the pricing and inflation as a result of the Iran-USA standoff.

— Kedar Vaze

I think, beyond the first half, it is very difficult to give a certain view of where the market is headed or what is the net results on the inflation and the growth rate that we can assume.

— Kedar Vaze

As of now, we do not see any cause for concern for the first half of the year.

— Kedar Vaze

I think the inventory prices are going up, it is very difficult to put an exact number, but upwards of 12%, 13% plus.

— Henil Bagadia

And sir, if we consider current situation persists on the raw material side, so in the first half, can we maintain this 40% gross margins or there is further risk on the downside?

— Kedar Vaze

So, some sluggishness there, across India, maybe a little bit across Europe also if we adjust for the impact of the depreciation in the rupee.

— Kedar Vaze

I think the full impact of inflation in India has not been felt as the oil and petrol and diesel prices have not moved up.

— Kedar Vaze

And just the other one I had was on the impact of forex.

— Abhijit Akella

So, are we still a net beneficiary or would you expect some, you know, pressure on the margin?

— Abhijit Akella

We do see some pressure on the margin because we do have a dollar loan into our books and that will have a translation impact.

— Jagdish Agarwal

European acquisitions we had a slowdown due to the capacity constraint in the last couple of years.

— Kedar Vaze

If you look at other expenses is lower compared to what we have in December, so there is a one-off impact of around Rs.

— Jagdish Agarwal

Q&A — 5 exchanges

Yes, you are right. And the fact that we are going through the capex cycle in our industry we should also look at the Development Centre opex as a sort of capex because it takes 2 to 3 years before we start to generate revenue on that. So, at this point we have the new initiatives last year which we have started in Germany, Manchester just came on stream this year and the US which came on stream last year. So, three centres which is almost Rs. 70 crore, to Rs. 80 crore of cost per year in opex are also of the nature of capex and they will start generating revenue after progressively, but after

Jagdish Agrawal

So, till that time these centres are not going to generate the revenues, these are going to be a cost centre only. Riddhesh Ram Gandhi: Yes, so just want to understand how large is, how, I am saying how large are the losses which we are bearing in these? It is roughly when you look at all these three combined in the range of Rs. 80 crore to Rs. 85 crore annually. I would say the investments are to the tune of Rs. 80 crore to Rs. 85 crore because they are not losses, we are producing products, we are giving samples. So, the development work is happening. But it is to the tune of Rs. 80 crore, a

Given the current situation, sir, what is the impact in terms of your RM price increases given that even the citrus terpenes, that is orange, lemon, grapefruit, also have been impacted and the crude derivatives RMs also have been impacted? And since you spoke that you have taken increases, will there be an aberration what happened in past where we had actually piled up on high-cost inventories and it further took us 1 to 2 quarters to get back to normalize EBITDA even after the situation actually cooled down? So, do you see something like that even happening right now? Not really. I think the

Henil Bagadia

So, we are not like in the pharma looking at patents as a way of entering existing market or taking over market share. Our patents are more in line of new innovations and help us to create products that are differentiated for our clients. So, the patents are not products that we sell directly, we use these patented products in our design. Okay. Sir, coming to the Europe one, since the plant is commercialized, so what kind of timelines do you see where we can actually reach to an optimal level? And given that we have actually added almost the same capacity that we are operating right now, which

Thank you for the opportunity. So, sir, what percentage of our raw material is linked to the crude? Q4 & FY 2026 Earnings Conference Call

Kedar Vaze

So about I would say 40% is directly linked to the crude and another 30% are indirectly linked to the crude in some part. Like freight and logistics etc. will affect across the board. Okay. And sir, if we consider current situation persists on the raw material side, so in the first half, can we maintain this 40% gross margins or there is further risk on the downside? I believe for the first half, we will be able to maintain this margin. As of now, we are covered the raw material and unless there is anything further, we will be able to continue the business at 40% plus gross margin. Okay. And s

Your voice is breaking Debanjana, but I gather that you are talking about the growth numbers, right?

Kedar Vaze

What the question Jagdish is what if the inflation environment was not there, without this disturbance, where would we ending up the year. So, as we have given our guidance and even if you look at the fourth quarter this year, we are at 13% and something adjusted EBITDA from the sustainable operating business. We would be upwards of 13.5%, 14% adjusted EBITDA in a normal environment. We believe that we have taken adequate steps to keep close to this number at least for the first half of this year and we will wait and watch and see and take corrective steps as necessary to ensure that we do not

Hi, yes. So, my question was more on the demand front. How do we see our demand shaping up over the next year and two? And like you said, that inflation going higher is good for us, but do you think that demand will be impacted because of higher inflation? I think yes, overall demand will be muted. I do not see the same kind of growth rate as is normal years. Demand will be muted. There will be a transition phase probably first half of the year while the demand the new sort of post-inflation scenario plays out. The overall industry level growth rates will come down, but our benefit in term of

Tanish Jhaveri

Okay. So, can you quantify the normal growth in any way in which we can be sure of this, like are you seeing any green shoots in this? So, we are, I mean we have seen this in various times when there has been big disturbance in the pandemic or in other times. There is a big disturbance, we have seen faster growth. Q4 & FY 2026 Earnings Conference Call Thank you. We take the next question from the line of Bharat Sheth from Quest Investment Managers. Please go ahead. Hi Kedar and Jagdish, thanks for the opportunity. First on this optimizing of the portfolio, so this Rs. 35 crore that is end or s

Speaking time

Kedar Vaze

Jagdish Agarwal

Moderator

Abhijit Akella

Henil Bagadia

Jagdish Agrawal

Bharat Sheth

Anurag Patil

Anoop Poojari

Jatin Chawla

Opening remarks

Anoop Poojari

Thank you. Good morning, everyone, and thank you for joining us on S H Kelkar and Company Limited's Q4 and FY 2026 Earnings Conference Call. We have with us Mr. Kedar Vaze, Whole-Time Director and Group CEO; Mr. B. Ramakrishnan, CEO Fragrances, Asia and USA; and Mr. Jagdish Agrawal, Group CFO of the company. We will begin the call with opening remarks from the management, following which we will have the forum open for a question-and-answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Kedar to make his opening remarks.

Kedar Vaze

Good morning, everyone, and thank you for joining us for the S H Kelkar and Company earnings call for the fourth quarter and financial year 2026. Financial year 2026 was a year of steady progress for the company as we continued to strengthen the platform for the next phase of growth. Despite a dynamic operating environment, we delivered an encouraging revenue growth supported by resilient demand across all our core categories and steady progress in the new markets. A key focus during the year was on building capabilities that support growth on the longer term. Our Creative Development Centres across key markets are now playing an active role in new product development, customer engagement, and market-specific innovation. We are encouraged by the level of engagement with new and existing Q4 & FY 2026 Earnings Conference Call customers as these centres become more integrated into our global innovation and delivery framework. In our industry, customer conversion and scale-up typically tak

Jagdish Agrawal

Thank you, Kedar. Good morning, everyone, and thank you for joining this earnings call. As we know the global environment continues to remain challenging with geopolitical and macroeconomic uncertainty impacting businesses across sectors. Despite this backdrop, the quarterly and annual results we shared last Friday reflect a performance that has remained broadly in line with our stated guidance. In many ways, these results reflect the preparatory actions we have been taking in anticipation of the current market situation. You would have noticed that during the quarter, we reported a one-off sale of approximately INR 35 crores of low-margin products as part of our ongoing portfolio optimization exercise. Q4 & FY 2026 Earnings Conference Call We are continuously reviewing our product and customer portfolio and taking conscious decisions to exit transactions that are structurally low margin and unsustainable, particularly in the current inflationary environment influenced by the Middle Ea

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S H Kelkar and Company Limited

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