JHS Svendgaard Lab­o­ra­to­ries Ltd

Money Times - - Stock Buzz -

(BSE Code: 532771) (CMP: Rs.31.90) (FV: Rs.10) By Subramanian Ma­hade­van

JHS Svendgaard Lab­o­ra­to­ries Ltd (JHS) started as a tooth­brush man­u­fac­turer in 1997 and grad­u­ally ven­tured into tooth­pastes and other oral prod­ucts with man­u­fac­tur­ing lo­ca­tions in North In­dia. It is pri­mar­ily en­gaged in the man­u­fac­ture of oral care prod­ucts such as tooth­paste, tooth­brushes, whiten­ing gels, whiten­ing mouth rinse and ef­fer­ves­cent tablets. Its an­chor-free tech­nol­ogy en­abled tooth­brush ma­chine has been im­ported from Bel­gium while state-of-the-art tooth­paste man­u­fac­tur­ing ma­chin­ery has been im­ported from Korea and Swe­den. JHS hit the cap­i­tal mar­ket in

2006 with its IPO priced at Rs.58/share, which was over­sub­scribed two times. In terms of sec­toral op­por­tu­nity, the to­tal size of the In­dian oral care mar­ket is ~Rs.9000 crore is dom­i­nated by tooth­paste (75% share, Rs.6750 crore) and tooth­brush (17% share,

Rs.1500 crore). The tooth­paste seg­ment is dom­i­nated by key in­cum­bents – Col­gate (55.6% mar­ket share), HUL (19.2%) and Dabur (15.5%). With over 300 mil­lion Indians with­out any ac­cess to oral care prod­ucts, Col­gate has cor­nered this pop­u­la­tion by reach­ing out to 125 mil­lion school chil­dren across the coun­try. Se­cond movers like JHS will largely ben­e­fit from the huge ground­work un­der­taken by Col­gate to de­velop and ex­pand this cat­e­gory. From a near-death ex­pe­ri­ence and lit­i­ga­tion is­sues re­sult­ing in a one-time set­tle­ment with Proc­ter & Gam­ble, JHS has emerged stronger over the last decade and has rein­vented it­self in a new avatar by launch­ing its own branded prod­ucts to gar­ner a larger pie in the oral care seg­ment. It has won multi-year mar­quee clients like Dabur, Patan­jali, etc. It has en­hanced 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.

In­vestors should par­tic­i­pate in the growth cum turn-around story of JHS con­sid­er­ing the tail­winds of the sec­u­lar oral care sec­tor growth, im­prov­ing mar­ket share of the com­pany and ca­pac­ity ex­pan­sion. Buy on ev­ery de­cline for good dou­ble-digit re­turns in the next two years.

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