S H Kelkar and Company Limited reported a 77.34% year-on-year increase in net profit to ₹45.4 crore for the quarter ended June 30, 2026, driven by strong demand in its Flavour segment and operating leverage across its consolidated business. The Mumbai-based fragrance and flavour manufacturer posted consolidated revenue from operations of ₹662 crore, up from ₹580 crore in Q1 FY26, while EBITDA margin expanded to 13.49% from 12.39%, signaling improved cost absorption despite higher working capital requirements.

The Board of Directors approved the unaudited standalone and consolidated financial results on July 28, 2026, and submitted them to the Bombay Stock Exchange and National Stock Exchange of India Limited. The filing was accompanied by an investor presentation detailing segmental performance and strategic priorities for FY27.

Financial Performance Highlights

The company's latest quarterly results reflect broad-based improvement across key financial metrics, with profitability growing significantly faster than revenue.

Revenue growth was broad-based, with the Fragrance segment contributing ₹539 crore (up 9.0% YoY) and the Flavour segment delivering a sharp 63.2% increase to ₹112 crore. Geographically, sales into Europe rose 23.7% to ₹148 crore, while Rest of World (ROW) revenues jumped 44.1% to ₹140 crore. India domestic sales grew modestly by 4.8% to ₹363 crore.

Segmental Dynamics

The Flavour division emerged as the primary growth engine, with EBITDA surging 154.8% to ₹35 crore from ₹14 crore in the prior year quarter. This robust performance offset a moderation in the Fragrance division's EBITDA, which declined 5.1% to ₹56 crore from ₹59 crore due to higher operating expenses linked to expanded R&D capabilities and global Creative Development Centres (CDCs). The Global Ingredients segment recorded a softer performance, with revenue falling 44.7% to ₹8 crore and posting an EBITDA loss of ₹2.3 crore, impacted by lower export demand amid geopolitical uncertainties.

Cost Structure and Profitability

The divergence between top-line growth and expense inflation highlights the company's strategic investment phase. While gross margins remained stable at 42.7% (versus 42.4% in Q1 FY26), employee benefits expenses rose 25.6% to ₹100 crore, outpacing revenue growth. This suggests that current margin expansion is heavily reliant on operating leverage from fixed cost absorption rather than pure pricing power or input cost savings. Furthermore, the significant contribution of exceptional items (₹30.0 crore gain) to Profit Before Tax indicates that core operational profitability, while strong, is supplemented by non-recurring gains in this quarter.

Management Commentary and Balance Sheet

Jagdish Agarwal, Group Chief Financial Officer, noted that strategic inventory build-up has increased working capital requirements, resulting in a net debt position of ₹852 crore as of June 30, 2026. Net debt-to-equity stood at 0.65x. Agarwal stated that debt levels remain consistent with earlier guidance, with management committed to deleveraging over the medium to long term. Kedar Vaze, Whole Time Director and CEO, emphasized that the company remains on track for double-digit revenue growth and improved margins for full-year FY27, despite potential quarterly variations in customer ordering patterns.

S H Kelkar and Company Limited reported a consolidated net profit of ₹45.43 crore for the quarter ended June 30, 2026, marking a 78% year-on-year increase from ₹25.55 crore in Q1FY25. The surge was primarily driven by an exceptional item — an on-account insurance claim receipt of ₹29.95 crore related to the April 2024 fire at its Vashivali plant. Excluding this one-time gain, operational profit before tax stood at ₹38.57 crore, up 12% from ₹34.44 crore in the prior year period. Revenue from operations rose 14% to ₹662.42 crore, supported by strong performance in both fragrance and flavour segments.

The Board of Directors approved the unaudited standalone and consolidated financial results on July 28, 2026, pursuant to Regulation 30, 33, and 42 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Deloitte Haskins & Sells LLP, the statutory auditors, issued an unmodified limited review report on the interim financial information. The results were filed with the Bombay Stock Exchange and National Stock Exchange of India Limited.

Divestment of Keva Ventures

In a strategic move to optimize its portfolio, the Board approved the divestment of its entire equity stake in Keva Ventures Private Limited (KVPL), a wholly owned subsidiary. The stake is being sold to Keva Aromatics Private Limited, a promoter group company, for an aggregate consideration of ₹45.85 lakh. Upon completion, expected by December 31, 2026, KVPL will cease to be a subsidiary, and consequently, its subsidiary AmiKeva Private Limited will also exit the group’s consolidated structure. This transaction is classified as a related party transaction executed at arm’s length.

Segment Performance

The Fragrance segment contributed ₹547.79 crore to sales, up from ₹509.83 crore in Q1FY25, while the Flavours segment saw robust growth with sales rising to ₹111.98 crore from ₹68.60 crore. Segment results (profit before interest and tax) for the group totalled ₹91.62 crore, compared to ₹58.83 crore in the previous year. The Flavours segment reported a segment result of ₹34.20 crore, a significant improvement from ₹13.07 crore in Q1FY25.

What the Numbers Show

While the headline profit growth appears substantial, it is critical to note that nearly 66% of the profit before tax (₹29.95 crore of ₹45.43 crore PAT equivalent impact) stems from the exceptional insurance claim rather than core operations. Operational profitability, however, remains healthy with segment results growing 56% YoY. The standalone entity reported a net profit of ₹15.21 crore, also boosted by the ₹29.95 crore insurance gain, against a standalone pre-tax loss of ₹9.62 crore before exceptional items. This divergence highlights the reliance on non-recurring gains for current quarter profitability, although underlying revenue growth of 14% indicates positive demand trends in the fragrance and flavour markets.