Crisil Ratings reaffirms S H Kelkar's rating at 'AA-' with 'stable' outlook

Crisil Ratings stated that the rating continues to reflect the established position of the Keva group in the flavours and fragrances industry, the extensive experience of the promoters, strong research and development (R&D) capabilities and a healthy financial risk profile.

These strengths are partially offset by exposure to intense competition and moderately high working capital requirement.

The operating performance of the Keva group will remain healthy, supported by growth in the flavours segment in international markets, continued client addition and contribution from Creative Flavours and Fragrances SpA (CFF) and Holland Aromatics BV.

Revenue is expected to continue grow in double digits in medium term, with stable demand, continued addition of new accounts and increase in capacities as company is in the midst of brownfield expansion in Holland and plants in India (Vanavati and Vaishvali).

With input costs stabilizing, price hikes taken towards end of Q4FY25, and operating leverage expected to improve, margins are anticipated to improve from the H2FY2026 and more meaningfully from FY2027 onwards post capex to 15-16%.

The financial risk profile of the company is marked by strong networth of over Rs 1,000 crore and healthy debt protection metrics.

In the interim, debt (excluding lease liabilities) increased to Rs 745 crore (from Rs 617 crore) owing to rise in working capital borrowings and term loans due to fire incident happened in April 2024 at Vaishavali plant, primarily to refurbish inventories at different locations and restoration of plant & machinery.

The company has planned capex of Rs 200 crore, primarily towards reinstatement of Vashivali facility, and capacity expansion in Holland and Vanavate facility. The borrowings are expected to moderate once the pending insurance claims are realized and capex at Vashivali plant is completed by first quarter of fiscal 2027.

Healthy internal accruals estimated at over Rs 200 crore each fiscal, liquid surplus and unutilised bank lines are more than sufficient to support repayment obligation, incremental working capital requirements and maintenance capex over the medium term.

S H Kelkar and Company, part of the Keva group, is engaged in the manufacture of fragrances, flavours and aroma chemicals.

The company had reported a consolidated net profit of Rs 25.57 crore in the quarter ended June 2025 as against net loss of Rs 86.58 crore during the previous quarter ended June 2024. Revenue rose by 23.66% to Rs 578.56 crore in Q1 FY26 over Q1 FY25.

The scrip fell 1.39% to currently trade at Rs 227.70 on the BSE.

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