S H Kelkar & Company Q2FY26 Concall Decoded – Smells Like Overinvestment, but Hopes Still Aromatic
1. Opening Hook
If optimism were a fragrance, S H Kelkar just launched a new limited edition — “Cautiously Confident No. 26.” Despite Europe sniffing recession, a factory fire, and raw material inflation still lurking, management insists it’s all part of a “strategic aroma journey.” Investors, however, are holding their noses after margin compression and ballooning costs disguised as “creative development.” The scent trail gets stronger — read on, because things start smelling even more interesting when CFOs call insurance surcharges “temporary” and 15% growth “sustainable.”
2. At a Glance
Revenue up 12% YoY: CFO insists it’s not perfume inflation — just “steady demand magic.”
EBITDA margin 14.5% (adjusted): That’s after removing Rs. 32 crore in “new initiative fragrance.”
European business muted: Blame “soft sentiment,” not the lack of deodorant.
Capex spree continues: Rs. 32 crore in H1; expect more in H2 because “expansion smells like growth.”
Net Profit flat: Profits took a power nap while costs partied abroad.
Debt elevated: Currency restatement smells like trouble, but management calls it “notional.”
3. Management’s Key Commentary
“Revenue grew 12% YoY driven by steady demand across all categories.” (Translation: The India unit pulled the cart while Europe forgot the map.)
“Rs. 32 crore was invested in new initiatives this half.” (Translation: We’re burning cash like incense and calling it innovation.) 😏
“Adjusted EBITDA margin stood at 14.5%, comparable to H2FY25.” (Translation: Comparable — if you squint hard and ignore insurance charges.)
“Our new U.S. creative center is operational.” (Translation: Yet another expensive office smelling of ambition and rent.)
“European softness continues, but brownfield expansion in the Netherlands is on track.” (Translation: The continent may be slow, but we’re busy building there anyway.)
“We expect margins and profitability to substantially improve over the next 15–18 months.” (Translation: Please, just give us six more quarters of patience — and premium insurance.)
“Investments are the foundation for sustained growth.” (Translation: We’ve lit a scented candle of hope and are praying it pays off.) 😅
