S H Kelkar and Company Limited (SHK) is the largest Indian-origin fragrance and flavour company, with over a century of expertise in the industry. It develops and supplies a wide range of fragrance and flavour ingredients that serve as raw materials in personal care, home care, perfumes, fine fragrances, food and beverage, dairy, baked goods, and pharmaceutical products. The company’s products are marketed under well-recognized brands such as SHK, Cobra, and Keva.
SHK operates five global creation and development centers across India, Singapore, Amsterdam, Indonesia, and Italy, supported by a team of skilled scientists, perfumers, flavourists, and evaluators. The company’s R&D capabilities have led to the development of 10 proprietary molecules in the last four years and the filing of 20 patents, with six already commercialized, particularly in deodorants and fine fragrances.
With a robust portfolio and strong innovation pipeline, SHK serves a large and diversified customer base, including leading national and multinational FMCG companies, flavour and fragrance blenders, and manufacturers. Its deep industry relationships and long-standing reputation make SHK a key player in the global fragrance and flavour value chain.
Business segments
Fragrances
SHK develops and manufactures fragrance compounds used in products like soaps, shampoos, detergents, perfumes, air fresheners, and deodorants. This is the company’s largest segment, supplying to both global and Indian FMCG companies. Its expertise lies in creating custom scents that align with consumer preferences, ensuring long-term client retention.
Flavours
In this segment, SHK creates flavouring agents used in food items such as snacks, dairy products, beverages, and confectionery. These flavours enhance taste and aroma, and are tailored to customer requirements. The business has rebounded well, driven by improved consumer demand and deeper collaboration with food manufacturers.
Global Ingredients
This division focuses on the production and export of specialty aroma and flavour ingredients, used as raw materials in fragrances and flavours. SHK has integrated backward into manufacturing key ingredients like isolates and synthetics, enabling cost control and quality assurance. Export demand, especially from Europe and the US,
supports growth.
Innovative solutions
A newer business line, this segment develops industrial fragrances used in products like plastic goods, consumer electronics, car air fresheners, and cleaning devices. These scents enhance the end-user experience and product appeal. This segment is gaining traction and offers future growth potential across Asian and Indian markets.
Segmental revenue performance
Geographical revenue performance
Growth drivers
Diversified customer base: Serving both multinational and mid-sized firms cushions SHK against demand cyclicality.
Global expansion: Investments in Europe, the UK, and the USA, particularly in creative development centers and client-facing teams, are aimed at building strategic partnerships with large FMCG clients.
Operational efficiency: Margin improvements are driven by backward integration, inventory control, and process optimization. The company is also focusing on sustainability, exploring green chemistry, renewable raw materials, and eco-friendly formulations as part of its innovation roadmap.
R&D and innovation: Partnerships (e.g., with Isobionics) and continual investment in technology strengthen SHK’s competitive moat.
Defensive industry dynamics: The non-discretionary nature of personal and home care products ensures revenue stability even during economic slowdowns.
Sustainability focus: SHK is aligning its product innovation and sourcing with global sustainability trends, catering to evolving consumer preferences.
Financial highlights
Annual (FY25 Full year)
Revenue: Sales generated from 3 verticals = ₹2,147 crore
Net Profit: ₹108 crore
EBITDA Margin: Around 14%
Gross Margin: Stable at ~44%, though under pressure due to climatic disruptions in key sourcing regions.
Management outlook and expectations
Growth guidance: Management reiterates a 12% CAGR target for the medium to long term. FY25 is tracking ahead at 17% growth, with double-digit growth expected to continue.
Margin outlook: Margins are expected to normalize as raw material prices stabilize and price increases are passed on to customers. Investments in new geographies are strategic and expected to drive higher growth and operating leverage over the next 18–24 months.
Risk factors: The main risks identified are raw material price volatility and competitive intensity. The sector is otherwise considered resilient, with limited disruption risk.
Market share: SHK has generally gained market share, except during periods of macro disruption (e.g., demonetization, GST rollout), and expects to continue outpacing industry growth.
Valuation perspective
At a current P/E ratio of 29.6, S H Kelkar’s valuation appears to be broadly in line with the industry average of ~29.9, which is reasonable given its consistent double-digit revenue growth, resilient business model, and improving product mix.
However, with an ROE of 8.66% and moderate EPS growth in FY25, the multiple may be slightly ahead of near-term earnings performance unless profitability improves meaningfully. On an EV/EBITDA basis, the stock trades at 12.3x, which is fair for a consumer-linked specialty ingredients company with global exposure and long-term growth visibility.
This valuation seems justified when factoring in management’s guidance of 12% revenue CAGR and expected expansion in operating profit margins, driven by backward integration, operational efficiencies, and rising contributions from high-value segments. Overall, the current valuation reflects optimism about future earnings and margin improvement, and will likely hold as long as execution stays on track.
S H Kelkar is steadily advancing a clearly defined growth strategy, underpinned by disciplined capital allocation and focused investments in innovation, global expansion, and operational efficiency. With industry-matching valuations and visible levers for margin expansion, the company is well-positioned to deliver sustainable value creation. Its differentiated business model, balanced product portfolio, and strong customer relationships reinforce its ability to outpace industry growth. As margin tailwinds from operating leverage and backward integration begin to play out, SHK stands out as a compelling player in the specialty ingredients space.
Global fragrance & flavour industry is worth $24.10 Billion and India contributes approximately $500 million. However, growth rate in India is approximately 11% in the last few years but is projected to grow exponentially in the upcoming years due to rising personal care, brand awareness, increasing disposable income, growing demand in middle class people and affordable price of perfumes, deodorants, and other aroma-based products.
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