JHS Svendgaard Laboratories .... Inching towards Success
JHS inching towards the GLORY JHS has become PAT positive after 6 years.
The Company has been through its share of cyclical business upheavals to emerge stronger. JHS has recovered well after its product portfolio growth with top Indian FMCG brand / company in last 2 years. The company has reported total revenues of Rs.105.48 Cr. up by 5.39%. EBIDTA is up 68% at Rs.12.04 Cr. and the PAT at Rs.21.98 Cr.
JHS is also engaged further in aggressive capacity creation and is investing heavily in the capital equipment(s), almost to the tune of Rs.30 Cr. towards setting up additional manufacturing unit and equipment balancing at our first unit, with the objective of creating a future-ready company by July2017. 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.
The aggressive CAPEX is backed by visibility of business from some of our larger clients including Patanjali and Dabur. Alongwith, JHS own brand, AquaWhite, is scaling distribution and we intend to significantly strengthen the brand franchisee and product positioning in coming months.
Interestingly the Company shall continue to debt-free coupled with strategic equity investors who understands the business and have provided a significant part of the Companys precious growth capital with long term goals in mind.
Happy Investing
JHS inching towards the GLORY JHS has become PAT positive after 6 years.
The Company has been through its share of cyclical business upheavals to emerge stronger. JHS has recovered well after its product portfolio growth with top Indian FMCG brand / company in last 2 years. The company has reported total revenues of Rs.105.48 Cr. up by 5.39%. EBIDTA is up 68% at Rs.12.04 Cr. and the PAT at Rs.21.98 Cr.
JHS is also engaged further in aggressive capacity creation and is investing heavily in the capital equipment(s), almost to the tune of Rs.30 Cr. towards setting up additional manufacturing unit and equipment balancing at our first unit, with the objective of creating a future-ready company by July2017. 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.
The aggressive CAPEX is backed by visibility of business from some of our larger clients including Patanjali and Dabur. Alongwith, JHS own brand, AquaWhite, is scaling distribution and we intend to significantly strengthen the brand franchisee and product positioning in coming months.
Interestingly the Company shall continue to debt-free coupled with strategic equity investors who understands the business and have provided a significant part of the Companys precious growth capital with long term goals in mind.
Happy Investing
My post and recommendation on 10 Sep 2016
ReplyDeleteJHS Svendgaard – An Oral Care FMCG Major In Making
Fast moving consumer Goods (FMCG) is the fourth largest sector of the Indian economy and the most consistently growing one too. Futhermore, it is the only sector that has created long term wealth for the market participants over the decades. Within the sector, Oral Care is a niche sub-seqment and one of the fastest growing one. Therefore, if we get an interesting story in the sector, one should strongly consider it. Increasing disposable earnings, growing middle class, rising oral awareness, convenient oral care products, growing distribution chain and logistics storage, increasing toothpaste penetration, development in oral care solution segments and others are some of the factors expected to drive the industry’s growth in the coming decades.
The Company: JHS is one of the biggest toothbrush contract manufacturers in the country and more excitingly has now launched its own set of branded oral care products under the brand “Aquawhite”. The company will have complete set of oral care products like tooth brush, power tooth brush, tooth paste, mouthwashes, dental floss and even oral care chewing gum. Company launched Aquawhite last year with its range of tooth brushes and tooth paste and is set to launch other products in the coming few quarters. Company has launched its tooth brush and paste in the North and East markets and is currently launching them in the southern and western markets as well. The TV advertisements have also started for these launched products. Within the first year of launch these oral care products have given around 12cr of revenue and with the launch of these brushes and toothpaste in the other two markets and impending launch of other oral care products, the future looks extremely promising. This is ofcourse in addition to the contract manufacturing business which itself is growing by leaps and bounds.
JHS is now an almost debt free company with enough capacities (55% capacity utilization), therefore, there’s no need of capex for near future. Furthermore, the company having learnt its lessons the hard way has tweaked its business model to become a branded FMCG player and not just a contract manufacturer. Though contract manufacturing is also growing very briskly they are ensuring that in future there’s no client concentration risk and therefore, would not have more than 25% revenue coming in from any single customer. At present, its working with a lot of customers like Dabur, Patanjali, Colgate, Lavoris, Amway,Apollo, Future Group, Dr. Fresh etc. With ace investor Nikhil Vora also a big stake holder in the company, combined with the changed business dynamics and direction of the company, JHS is bound to create serious share holder wealth in the coming years.
JHS Svendgaard is going to be a very interesting bet as it is in the right sector and we are catching it at the right time when there are business tailwinds and technical wings, with, just the kind of investors on-board, that we can hope to guide the management in creating serious shareholder wealth. Yes, the company has had terrible past 3-4 years but has handled the situation well and re-discovered itself in the right form – a FMCG player. And most importantly since its an FMCG player, if one looks to ride it, then ride it for long time rather than looking at it every day.