Additional Equity Investment in Keva Europe BV
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**privi specality results were announced
Why is the employee cost of Shk is more than double of Privi for the same amount of turnover and as per annual report employee are around 840 for both the companies.
can some seniors tracking throw some light please
Regards
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Very interesting observation. I have not tracked Privi but based on a review of their investor presentation some possible explanations
a. The nature of the business is different - Privi is in a different part of the value chain - so they provide bulk chemicals / formulations as an input into blenders like SH Kelkar (Keva) - see page 11 of Privi’s latest investor presentation. SHK has a more specialised business of blending multiple inputs to match exact requirements of FMCG customers (who are their direct customers)
b. Part of this difference can be explained by the factors of production - though the employee cost is lower, the depreciation cost for Privi is approx 50% higher (and perhaps therefore the cost of finance? - just a guess). So it seems that part of the value chain is more equipment heavy whereas the SHK part of the value chain is more employee expertise heavy (I have seen a similar trend in tea - where tea blenders are a very highly paid and expertise based service).
Though they have similar profitability, the market seems to reward Privi with a much higher multiple (the JV with Givaudan probably helps -as they will likely be a captive buyer).
I think SHK has been trying to backward integrate a bit as well (into what they call Global Ingredients) - but that is a small part and to derisk sources rather than as a line of business.
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Very Well Explained @sujay85, Whoever asking FMCG Valuations, for their understanding I would say, Fragrance in detergents typically ranges from 0.1% to 0.8% by volume and in soap typically ranges from 3% to 5% of the total soap weight depending on quality which means there is not bulk use of F&F in FMCG Products and they are moslty into B2B Category where RM prices fluctuate a lot plus B2B players have limited pricing power.
So frankly dont get exiced about FMCG valuations.
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Can you please explain why SH Kelkar have very low interest rate 5-6%?
Q2FY2026
S H Kelkar and Privi Speciality seem to have gone on completely different trajectories.
In a rising input costs environment for aroma chemicals, Privi seems to have benefitted a lot from its backward integration for manufacturing of alpha and beta pinenes using by-products of paper industry.
They are at an advantage of 15-20% compared to players like S H Kelkar, Oriental Aromatics using GTO (gum turpentine oil).
S H Kelkar had guided earlier that their margins should improve from H2.
Management call scheduled on 12th november 2025 (Wednesday)
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Have you listened to management call ?
Hey rohit,
With so many results & concall to follow I haven’t got time to go through. But planning to listen to it in a day or 2 & update the nuances here.
anyone tracking this company?
Market Cap = ₹ 1833 Cr.
Sales = ₹ 2368 Cr.
disc: studying this sector for education purpose. no position/investment
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@Hemal000 Hi I have been tracking this company for last 5 years and here are my observations.
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The company is currently in a massive investment phase with multiple creative development centres in US, Germany and Manchester. There is a drag of 80Cr. in P&L from these initiatives alone. It will take another 3 years according to the management.
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They are building one new plant and rebuilding an earlier burnt plant which is also consuming capex. One will come live in first half and the other in second half of FY27.
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They are also currently facing RM headwinds as directly and indirectly 70% of their RM is linked to crude though for first quarter they are covered with inventories.
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They have historically guided 12-15% revenue growth and currently they are the worst margin phase in recent history but it will take another year or two for margins to recover. The mgmt guided for 13.9% EBITDA margin for FY29 before the start of the war.
Disclosure: Not invested, but seems at an interesting juncture.
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Have u heard of companies classified as PPND
Permanently pregnant and never delivers this company falls in that category over 7 yrs if u see the concall and numbers u will understand they dont walk the talk
What is there inherent problem I dont know but privi and fine are better options even though expense
Discl sold long back
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Hi, completely agree with the point on privi and fine are better companies in terms of performance and also agree on the point of expensive valuation for the above options.
I feel SH Kelkar got into this trap because they had a vision to become one of the largest F&F companies in the world (like entering top 10) and for this in the past decade they heavily increased their presence in International markets both organically and inorganically. And during this time some macros were not favorable like COVID, Ukraine war, Iran war and company specific issues like Factory Fire. Despite that they did not back down from their earlier commited capex for the expansion (mostly through debt) which is now stressing their Balance Sheet and P&L.
But now they stopped all their capex initiatives apart from finishing the already commited capex and the ongoing capex in the form of opex for the new CDCs. And focus for next year will only be improving the profitability and keeping the sales.
I do understand that this FY27 will be washout year probably worse than FY26. But recovery will start from FY28 once the RM cycle turns more favourable.
But I understand the risk of execution still doesn’t go away and that’s why the valuation is very cheap.
Also there are now options to play only the domestic theme in the form of Sacheerome which is having great return ratios and moderate to good growth guidance which was once expected out of SH Kelkar.
Disclosure: Not invested but still studying
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