S H Kelkar and Company Limited (NSE: SHK), India’s largest domestic fragrance and flavor producer, reported its financial results for the third quarter of fiscal year 2026 today. The company delivered a significant surge in bottom-line profitability, primarily driven by insurance claim realizations, even as it navigates a strategic investment phase that has temporarily weighed on operating margins.
Financial Performance Snapshot (Q3 FY26)
| Metric | Q3 FY26 (₹ Cr) | Q3 FY25 (₹ Cr) | YoY Change (%) |
| Revenue from Operations | 583.8 | 543.2 | +7.5% |
| EBITDA | 56.1 | 64.5 | -13.1% |
| EBITDA Margin | 9.7% | 11.9% | -220 bps |
| Net Profit (PAT) | 32.63 | 17.51 | +86.4% |
| Earnings Per Share (EPS) | 2.36 | 1.27 | +85.8% |
Segmental Analysis and Market Expansion
Despite the margin pressure in the core fragrance business, SHK’s Flavours segment and international markets emerged as high-growth engines.
Fragrance Segment: Continues to be the primary revenue driver, contributing ₹528.91 crore for the quarter.
Flavors Segment: Showed exceptional momentum, with 9-month revenue growing 37.9%. Management noted strong demand in international markets and deeper engagement with existing clients.
The “US Milestone”: A major highlight of the quarter was the US Creative Development Centre securing its first customer order. This marks SHK’s formal entry into the world’s largest flavor and fragrance market.
Regional Growth: While India grew by a steady 5.2% over the first nine months, the “Rest of the World” (RoW) region grew by 31.5%, signaling a successful diversification strategy.
Management Commentary & Strategic Outlook
Mr. Kedar Vaze, Whole Time Director & CEO, emphasized that the current margin compression is a calculated trade-off for long-term scalability.
“Our current phase of investments is a strategic choice to build for the next growth phase. We are strengthening global creative centers and expanding capacity to enhance innovation and customer engagement.”
Management described Q3 FY2026 as a strategic investment phase, with emphasis on long-term growth over near-term margin expansion. Commentary focused on strengthening global capabilities, expanding international presence, and maintaining financial discipline amid cost pressures.
Key Con-Call Highlights:
Debt & Capital: The company acknowledged a potential near-term increase in debt to fund Middle East and US expansions. However, the CFO highlighted a focus on improving working capital efficiency and cash conversion.
Interim Dividend: The Board has declared an interim dividend of Re. 1 per equity share (Record date: February 13, 2026).
Middle East Focus: Approved an additional equity investment of AED 5 million into its Middle East subsidiary to support growing regional demand.
Investor Outlook
S H Kelkar’s Q3 FY2026 results underscore a revenue and profit rebound at the bottom line, with notable growth in net profit compared with the prior year. However, operating margins remain squeezed, reflecting investment-led costs and structural pressures. Management’s emphasis on long-term strategy and global footprint expansion, including the U.S. market, suggests that the company is prioritizing future growth potential over short-term margin optimization.
For investors and stakeholders, the quarter reflects a transitionary phase: a top-line growth story supported by strategic initiatives, balanced against tighter margins and near-term profitability challenges. The effectiveness of investments in new markets and enhanced capabilities will likely be key drivers of performance in subsequent quarters.