Sep 3, 2017

Update on JHS Svendgaard

I don't provide updates here but this time I thought to add about JHS Svendgaard.

Here are updates about JHS after quarter 1 result (June, 2017):

In Q1 FY18, JHS witnessed 17 percent YoY growth in net sales led by improved offtake contracts from clients. Gross margins improved by 145 bps due to relatively lower increase in raw material prices. EBITDA margin, however, decreased by 85 bps due to higher other expenses that was partially offset by lower employee expenses.
It is noteworthy here that excise exemption for the unit manufacturing toothpaste (Kala Amb) is over and hence from this quarter onwards the company has started paying excise duty. However, JHS continues to enjoy duty exemption for its unit manufacturing toothpaste till 2020.

Patanjali and Dabur could be a key clients for growth.

Based on Annual Report, we expect a 30 percent sales CAGR and 330 bps operating profit margin expansion during the period FY17-20E.
In FY18, the company expects a 20-25 percent revenue growth on account of capacity expansion and another 10-15 percent by way of organic growth in the business. We think organic growth of 15 percent can easily be achieved, particularly due to the base effect as FY17 was impacted to the tune of Rs 20-25 crore owing to demonetization.
The company has recently concluded its capacity re-alignment. It has raised its toothpaste manufacturing capacity to 175 million tubes (from 90 million tubes) which is now aligned with its manufacturing cum packaging capacity of 28,000 TPA. This capacity enhancement is expected to be commissioned in the current quarter.

More on Q1 Result about JHS Svendgaard

JHS Management here on q1 result.