S H Kelkar and Company Limited (SHK), operating under the brand Keva, is the largest Indian-origin company in the Fragrance and Flavour industry. With a legacy spanning over 100 years, the company has established a formidable reputation and deep expertise. SHK's business is vertically integrated, focusing on the creation, manufacturing, and supply of fragrances and flavours that serve as essential raw materials for a wide range of industries. Its fragrance division caters to sectors such as personal care (personal wash, skin and hair care), fabric care, fine fragrances, and household products. The flavour division provides critical ingredients to producers of baked goods, dairy products, beverages, and pharmaceuticals.

The company's strength is rooted in its commitment to research and innovation. SHK operates a network of five creation and development centers located in India, Singapore, Amsterdam, Indonesia, and Italy. These centers are staffed by a dedicated team of scientists, perfumers, flavourists, and application specialists. This R&D focus has led to the development of 10 new molecules in the last four years and the filing of 20 patent applications for novel molecules and processes, of which six have already been successfully commercialized in high-demand categories like deodorants and fine fragrances. SHK serves a diverse and high-quality client base that includes leading national and multinational Fast-Moving Consumer Goods (FMCG) companies, as well as specialized blenders and producers within the fragrance and flavour ecosystem. The company markets its products under its primary brands: SHK, Cobra, and Keva.

Official Website: www.keva.co.in

• Revenue Performance (9M FY26 vs 9M FY25)

• Revenue from operations for the nine months ended December 31, 2025, stood at Rs. 1,718 crore, an increase of 10.4% from Rs. 1,556 crore in the same period of the previous year. This growth reflects steady demand across core business categories.

• Total income for the period was Rs. 1,720.6 crore, a 9.0% increase from Rs. 1,578.2 crore.

• Profitability Analysis (9M FY26 vs 9M FY25)

• Gross Profit increased to Rs. 724 crore from Rs. 683 crore.

• EBITDA was Rs. 182 crore, a decrease from Rs. 224 crore. The decline is attributed to costs associated with strategic growth initiatives.

• Adjusted EBITDA, which excludes costs from new initiatives, other income, and incremental insurance, stood at Rs. 240 crore compared to Rs. 253 crore.

• Profit Before Tax and exceptional items (PBT bei) was Rs. 63 crore, a significant decline from Rs. 139.2 crore.

• Adjusted Profit After Tax (PAT) was Rs. 31.5 crore, down from Rs. 82.2 crore.

• Expense Structure (9M FY26 vs 9M FY25)

• Raw material expenses increased by 14.0% to Rs. 987.0 crore.

• Employee benefits expense rose by 20.3% to Rs. 257.8 crore.

• Other expenses grew by 15.5% to Rs. 291.7 crore. These increases in expenditure, particularly in employee and other expenses, are aligned with the company's investment phase.

• Balance Sheet Health (as of December 31, 2025)

• The company's Net Worth stood at Rs. 1,368 crore.

• Fixed Assets were valued at Rs. 1,149 crore.

• Net Debt was Rs. 698 crore, resulting in a Net Debt to Equity ratio of 0.51x, which indicates a prudent capital structure.

• Cash and Investments on the books amounted to Rs. 93 crore.

The company demonstrated steady top-line growth in a challenging environment, but profitability was impacted by planned strategic investments aimed at future expansion.

• Market Leadership and Heritage

• SHK is the largest fragrance and flavour company of Indian origin, backed by over 100 years of operational history and experience.

• Strong Research and Development Capabilities

• The company operates five global Creative Development Centres in key markets like India, Singapore, and Europe.

• A dedicated team of scientists and creative professionals has developed 10 new molecules in the last four years.

• SHK has a robust intellectual property pipeline, with 20 patent applications filed and 6 already commercialized in high-value product categories.

• Diverse and High-Quality Customer Base

• The company has established long-standing relationships with a broad client base, including leading national and multinational FMCG companies. This diversity provides revenue stability and a wide market reach.

SHK's competitive advantage is built on its market leadership in India, deep-rooted experience, and a strong, demonstrated commitment to innovation and R&D.

• Operating Environment

• The company operated in what is described as a "challenging operating environment" during the nine months of FY2026.

• The Global Ingredients segment, in particular, was impacted by "persistent geopolitical headwinds," which led to a softer performance.

• Future Outlook

• Despite near-term challenges, the long-term growth prospects for the Global Ingredients segment are considered favorable.

• This optimism is supported by anticipated "structural shifts in global supply chains," which could create new opportunities for established players like SHK.

The company is navigating a difficult macroeconomic and geopolitical landscape, but it anticipates positive long-term trends from shifts in global supply chain dynamics.

• Overall Business Growth

• Revenue grew by 10.5% year-on-year for 9M FY26, indicating solid business momentum driven by steady demand.

• Flavour Segment

• The Flavour division was a standout performer, reporting robust year-on-year revenue growth of 37.9%.

• This growth was primarily driven by strong demand in international markets and deeper engagement with existing customers.

• Fragrance Segment

• The core Fragrance division delivered steady revenue growth of 8.9% year-on-year.

• Geographic Performance (Fragrances)

• The Rest of the World (RoW) was the fastest-growing region with 31.5% growth.

• India delivered 5.2% growth, while Europe grew by 3.6%.

• Geographic Performance (Flavours)

• The India business grew significantly by 44.3%.

• The Rest of the World (RoW) also showed strong growth at 30.5%.

Growth was broad-based, with the Flavour segment and international markets showing particularly strong performance, underscoring the success of the company's expansion efforts.

• U.S. Market Expansion

• The U.S. market is identified as a "significant strategic opportunity" for SHK. It is the world's largest market for flavours and fragrances.

• The company is making tangible progress, with its U.S. Creative Development Centre securing its first customer order and generating initial revenues during the quarter. This is a crucial early milestone for market entry.

• Global Supply Chain Realignment

• Structural shifts in global supply chains are viewed as a medium to long-term tailwind, particularly for the Global Ingredients segment. These shifts can create opportunities for reliable suppliers like SHK to gain market share.

The company is actively pursuing significant growth opportunities by entering the large U.S. market and positioning itself to benefit from long-term structural changes in global trade.

• Strategic Capacity Expansion

• The company is currently in a phase of strategic investment, which includes "expanding capacity." This is part of a broader plan to build the foundation for the next phase of growth.

While specific figures on utilization rates or capex amounts are not provided, the company's strategic direction clearly involves investing in increased production capacity to meet future demand.

• Long-Term Growth Investments

• The current investment phase is a strategic choice designed to position the company for sustainable and profitable long-term growth, rather than achieving short-term outcomes.

• Key investment areas include strengthening global Creative Development Centres, expanding capacity, and enhancing capabilities in innovation, execution, and customer engagement.

• Financial Strategy

• The new CFO will focus on strengthening financial discipline, improving working capital efficiency, and enhancing cash conversion to translate operating performance into better bottom-line results.

• The company is committed to maintaining a prudent capital structure, although it anticipates a potential near-term increase in debt levels to fund the execution of its strategic initiatives.

SHK is executing a disciplined, long-term strategy focused on building capabilities and capacity, supported by a renewed emphasis on financial efficiency and prudent capital management.

• Gross Margin Performance

• The Gross Margin for 9M FY26 was 42.3%, compared to 44.1% in 9M FY25. The company commentary described this as "broadly stable."

• EBITDA Margin Compression

• EBITDA margin for 9M FY26 stood at 10.6%, a notable decrease from 14.4% in the prior year period.

• This margin compression is a direct result of the costs associated with the ongoing rollout of growth-oriented strategic initiatives.

• Adjusted EBITDA Margin

• Adjusted for these strategic investment costs, the Adjusted EBITDA margin was 14.0% for 9M FY26, compared to 16.4% in 9M FY25.

• Segmental Margin Analysis

• The Fragrance division's Adjusted EBITDA margin was 14%, down from 16%.

• The Flavour division's EBITDA margin was 22%, down from 24%.

Margins are currently under pressure due to deliberate, front-loaded investments in future growth, a trend visible across both reported and adjusted profitability metrics.

• Investment Payoff Timeline

• Management states that the current investments are "not designed for short-term outcomes" and benefits will "accrue progressively." This implies a risk that the returns from these significant investments may take longer than anticipated to materialize, while costs are being incurred in the present.

• Near-Term Financial Pressure

• The ongoing investment phase is directly impacting profitability, as seen in the decline of EBITDA margins.

• The CFO has indicated that "debt levels may see a near-term increase," which could elevate financial leverage and associated interest costs.

• External Headwinds

• The business is exposed to external risks, including a "challenging operating environment" and "persistent geopolitical headwinds" that have already impacted the Global Ingredients segment.

The primary risks are internal and strategic, related to the execution and timing of its long-term investment plan, coupled with external macroeconomic and geopolitical uncertainties.

• Executive Leadership

• Mr. Jagdish Agarwal has joined the company as the Group Chief Financial Officer. His stated priorities are to enhance financial discipline, improve working capital efficiency, and strengthen cash conversion.

• U.S. Business Milestone

• A significant operational milestone was achieved during the quarter as the U.S. Creative Development Centre secured its first customer order and began generating revenue, marking a successful initial step into a key strategic market.

Key updates include a leadership change in a critical finance role and a tangible step forward in the company's strategic expansion into the United States.