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    Buy S H Kelkar & Company, target price Rs 250: HDFC Securities

    Synopsis

    S H Kelkar & Company Ltd. key Products/Revenue Segments include Chemicals, Other Operating Revenue, Scrap and Export Incentives for the year ending 31-Mar-2021.

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    Promoters held 58.57 per cent stake in the company as of 30-Sep-2021, while FIIs owned 7.38 per cent, DIIs 5.01 per cent.
    HDFC Securities has buy call on S H Kelkar & Company with a target price of Rs 250. The current market price of S H Kelkar & Company is Rs 165.1. Time period given by analyst is six months when S H Kelkar & Company Ltd. price can reach defined target.

    S H Kelkar & Company Ltd., incorporated in the year 1955, is a Small Cap company (having a market cap of Rs 2190.47 Crore) operating in Chemicals sector.

    S H Kelkar & Company Ltd. key Products/Revenue Segments include Chemicals, Other Operating Revenue, Scrap and Export Incentives for the year ending 31-Mar-2021.


    Financials
    For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 359.90 Crore, up .25 % from last quarter Total Income of Rs 358.99 Crore and down -.20 % from last year same quarter Total Income of Rs 360.63 Crore. Company reported net profit after tax of Rs 22.10 Crore in latest quarter.
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    Investment Rationale
    The brokerage believes SHK would be a major beneficiary of increasing demand from FMCG companies specifically present in personal care, packaged foods & dairy products. Management guided for 12-13% CAGR in revenue over the next 3-4 years. Company said that gross margin would be sustainable at 42-43% area in the medium term. The brokerage expects 12.5% revenue CAGR over FY21-24E largely led by strong volume growth in the end user industry. It believes margin should remain around 15-16.5% over the same period largely due to pressure in gross margin and higher expenses. It estimates ~9% PAT CAGR on the back of strong revenue and steady margin. Recently global giant Firmenich Aromatics took 10% stake in the company. This would help SHK in technological & R&D newer product development. Management said that the company will maintain distribution policy of 30-40% via dividend/buybacks as no major capex is planned in the medium term.

    Promoter/FII Holdings
    Promoters held 58.57 per cent stake in the company as of 30-Sep-2021, while FIIs owned 7.38 per cent, DIIs 5.01 per cent.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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