SH Kelkar & Company , a leading fragrance and flavor solutions provider, reported a 12% year-on-year consolidated revenue growth for the first half of fiscal year 2026 (H1 FY26). The company's performance was driven by steady demand across core categories, despite facing margin pressures due to significant investments in new initiatives.

Financial Highlights

• Consolidated revenue growth: 12% year-on-year in H1 FY26
• EBITDA margin: 11-12% (adjusted EBITDA margin at 14.5%)
• New initiative investments: Rs. 32.00 crore in H1 FY26
• Additional insurance costs: Rs. 7.00 crore in H1 FY26

Business Performance

The company's Fragrance business maintained its growth momentum, supported by stronger relationships with small and mid-sized clients. The Flavour division delivered healthy performance across both domestic and export markets. However, the European Fragrance business experienced a softer environment, resulting in muted sales for the first half.

Investments and Expansion

SH Kelkar has made significant investments in new creative development centers across India, Europe, and the United States. These investments, totaling Rs. 32.00 crore in H1 FY26, are part of the company's strategy to strengthen its global presence and prepare for future growth opportunities.

Margin Pressure and Future Outlook

The company's EBITDA margins were under pressure due to the substantial investments in new initiatives. However, management expects margins to improve in the second half of FY26 as raw material costs decline and new factory operations commence. The adjusted EBITDA margin stood at 14.5% compared to 14.4% in H2 FY25.

Kedar Vaze, Whole-Time Director and Group CEO, commented on the results: "We remain focused towards our long-term vision of emerging as a globally recognized leader in Fragrances and Flavour solutions. Our sustained focus on R&D and innovation will continue to enable us to create differentiated products and technologies, many of which are being developed for the first time in the world."

Future Expectations

• The company expects margins to improve in H2 FY26, with Q4 potentially showing more improvement than Q3.
• Management anticipates reaching EBITDA margins of 18% within the next 2-3 years.
• The new factory in India is expected to start operations in Q4 FY26, which should help address capacity bottlenecks and improve cost efficiency.
• SH Kelkar aims for a 15% year-on-year revenue growth over the next 3-4 years.

While the company faces short-term challenges due to its expansion and investment strategy, management remains confident in the long-term benefits of these initiatives. Investors will be closely watching how quickly these investments translate into improved financial performance and market share gains in the coming quarters.

SH Kelkar & Company (SHK), India's largest Indian-origin fragrance and flavour company, has announced its financial results for the half-year ended September 30, 2025, showcasing resilient growth amid challenging market conditions.

Financial Highlights

The company reported a consolidated revenue growth of 12.2% year-on-year for H1 FY26, with revenues from operations reaching Rs. 1,135.00 crore. Here's a breakdown of the key financial metrics:

Segment Performance

SH Kelkar's growth was driven by resilient demand across core categories and continued traction with existing and new customers. The company's performance across different segments showed varied results:

1. Domestic Business: Maintained healthy momentum, supported by deeper engagement with small and mid-sized clients.
2. European Operations: Remained steady amid subdued market conditions.
3. Fragrances: Grew by 9.3% YoY to Rs. 973.00 crore in H1 FY26.
4. Flavours: Showed strong growth of 54.4% YoY, reaching Rs. 125.00 crore.
5. Global Ingredients: Experienced a 12.1% YoY decline, with revenue at Rs. 32.00 crore, due to demand softness and geopolitical uncertainty.

Strategic Developments

SH Kelkar announced two significant developments that are expected to strengthen its market position:

1. New CFO Appointment: Mr. Jagdish Agarwal has been appointed as the Chief Financial Officer, effective December 2, 2025. With over 28 years of experience in manufacturing, telecommunications, and banking, Mr. Agarwal is expected to enhance the company's financial governance and operational efficiencies.

2. Capacity Expansion Projects: Two key projects are progressing well and are expected to be commissioned by Q4 FY2026:

   • Greenfield facility at Vanavate
   • Brownfield expansion at Holland Aromatics

These projects aim to enhance capacity, improve operational costs, and support future growth across both domestic and international markets.

Management Commentary

Mr. Kedar Vaze, Whole Time Director and Group CEO at SH Kelkar and Company, commented on the performance: "We delivered a steady performance, with consolidated revenues for the half year growing by 12.2% YoY. This growth momentum was driven by resilient demand across our core categories and continued traction with both existing and new customers."

He further added, "Investments in strategic initiatives across Germany, the UK, and the US, along with capacity expansion projects in the Netherlands are expected to strengthen execution and operating leverage. As these projects scale up over the next 15-18 months, margins and profitability are expected to improve."

Future Outlook

SH Kelkar remains focused on building a stronger foundation for sustainable growth over the long term. The company expects its ongoing investments in growth initiatives to contribute meaningfully over the next 15-18 months, potentially improving margins and profitability.

The medium to long-term outlook for the Global Ingredients segment remains positive, supported by structural growth drivers such as the China-plus-One shift and rising demand from European customers.

As SH Kelkar continues to navigate through market challenges and capitalize on growth opportunities, investors will be keenly watching how these strategic initiatives translate into financial performance in the coming quarters.