Aug 22, 2017

JHS Svendgaard Laboratories - Can it count as a FMCG company!

JHS Svendgaard Laboratories is in toothbrushes and toothpastes. It has few other products - Hand sanitizer, and room fresheners.

Mainly it has two products type - Tooth brush and tooth paste which it take as contract manufacturing and also trying to build its own brand.

Patanjali, HUL and Dabur are its clients.

P & G was a client of the company for contract manufacturing but P & G abruptly canceled the contract and that resulted in heavy loss for the company. JHS has setup the plant for the company. This resulted in court case too. 

The court case has settled recently. This has resulted in clearing of 206 Cr contingent liability.

It has won contract manufacturing last year from Patanjali. This will help it gain topline I believe. Dant Kanti is doing good.

JHS Svendgaard lab is doing capacity expansion too by investing Rs 30 Cr.

The overall capacity in toothbrushes to increase from 150 million toothbrushes (March 31, 2017) to 250 million toothbrushes (March 31, 2018). For Toothpaste from 90 million toothpaste tubes (March 31, 2017 ) to 175 million toothpaste (July 30, 2017), and from only 3 size tubes to 7 size tubes 18/30/50/80/100/150/200 gms. More
It plans to increase its own tooth brush and paste business under own brand name too but there it may not find space. That space is fought by biggies like Colgate and HUL. Patanjali and Dabur started doing well in Ayurveda space.

Company has learnt from its past mistake and now it does not take more than 20% manufacturing contract from a single client.

CMP: Rs 66.
P/E = 13.26.
P/S = 2.7.
P/B = 2.2.

It has become profitable after three years. That has helped it improve its Ratios.

Patanjali should help it stay profitable and give some growth too. If this can capture own space for its brand (Aquawhite, ..) then that will transform it to a truly FMCG company.

June qtr result is on Aug 29th, 2017.