JHS Svendgaard – An Oral Care FMCG Major In Making

Background: 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 brandAquawhite”. 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 was recently bailed out by funds infusion when it got into debt trap in 2011-12. Till 2011 the company used to be debt free when in lieu of a large order from its biggest customer, prompted them to take huge debt for a new facility built specially for that customer (P&G). After this came the body blow, when P&G went on to terminate the contract albeit illegally (as per JHS, and the company is fighting for compensation in court) and this created massive problems for the company as it had to not only deal with the debt payments but also on drastically reduced turnover. P&G and that point was contributing 75% of total revenues for JHS (Client concentration risk ). Needless to say this pushed JHS in a severe debt trap and was close to be shut down when it was rescued by promoters and a marquee PE investor pumping in money to revive the company as part of revival strategy. Also, taking it as a re-birth of the company, JHS consciously decided to use its expertise in Oral care products to produce their own branded version and rechristen its avatar as a FMCG player.


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.

Valuations: JHS is almost a debt free oral healthcare based FMCG company available at just one time sales whereas other FMCG companies trade at 7-15 times their annual sales. Also given the fact that their business is growing exponentially we’ll get the twin benefits of growth and valuations re-rating. Promoters stake at the moment is around 37.55% which would increase to around 42% after conversion of warrants this year. The sales of company has grown from 35cr to 100cr in last two years with losses reducing drastically and the company even posting a notional profits of few lacs rupees at operating level in the latest quarter. The company is confident of posting profits this year.

Technicals: The stock has formed a firmed bottom and has made long term basing and accumulation pattern. The stock is ready for a fresh upmove and given what we have on the fundamental side, the stock will create sustainable wealth for its investors.

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.

God Bless !!!

Disclaimer: It is safe to assume that I may have some vested interests in the stock. Also, the above stock story is my personal view in individual capacity. For rest, please look at the About page.

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117 Responses to JHS Svendgaard – An Oral Care FMCG Major In Making

  1. Akshay says:


  2. Rajendra says:


  3. Rohit Gulati says:

    Thnx for the new Stock Story.

  4. Narveer says:

    Hi Ace, Thanks for your new recommendation after a long long time. I have few queries about “JHS Svendgaard ”
    1. Low promotors holding 33.05. Also, Promotors holding has reduced from 37.55 to 33.05%.
    2. There is constant equity dilution.
    3. Company is showing loss QOQ.

    • please dont just look at bse site and take a call. read the stock story and last few AR…its very well explained. Equity dilution is for a reason and so is loss. promoter holding has not reduced, rather it has increased. would strongly suggest you to research the idea.

  5. Rajendra says:

    Sorry. Thanks. JHS will get wings from tommorow🙂

  6. NP says:

    SIR…after a long wait getting your reco…thx

  7. turtletrader says:

    can you tell us a little bit more on how you go about finding the stocks. No need to disclose the exact steps but broadly how you reduce the universe in BSE to about 50-100 that you can then narrow further etc? Also once you narrow it for e.g say JHS, how do you go about digging the history etc.

  8. shailesh says:

    Thanks ace

  9. shailesh says:

    Thanks a lot ace for new pick

  10. Raj says:

    Ace ur back with another gem,😂

  11. Chanadrsehekara Bhat says:

    Thanks Ace.

  12. shiva says:

    thank you..wat r ur views on nitin spinners?

  13. David says:

    Hi Ace,

    Just thought of asking,there is lot of talk, buy, on infrastructure,sugar,cement stocks but surpringly you have chosen FMCG stock !!!

    Already you have told ,not interested in sugar stocks.

  14. Pramod says:

    Thanks ace 😀
    Nice recommendation.

    Your view on auto ancillary : PRICOL

  15. Vinod says:

    Dear ACE,

    Yours view on Sterlings bio for long term.

    Thank you in advance

  16. Ravishankar says:

    on a lighter note : this post is just like friday movie release after long time🙂

  17. Binod Pradhan says:

    Hi aceinvester, Is Deccan Gold worth holding still?

  18. Vinod says:

    Dear Ace,
    JHS 20 percent UC in premarket itsself. Hope i will get some or else wait…

    Thank you

  19. dhairya says:

    Sir , thanks a lot for new Gem . cotton estimate for yr is -4 % . Do u think it can impact cotton yarn companies adversely

  20. Gopal says:

    Its story is more or less similar to Wanbury Ltd?? balance sheet running from negative to positive, gradually.

  21. Sankar Krishnamoorthy says:

    Superb analysis Sir.Wow!!!!!!! Fantastic!!!! stock UP 20%..congrats sir.

  22. Chets says:

    Thanks for the reco Ace! What are your views on Jagran Prakashan and Wimplast?

  23. Sankar Krishnamoorthy says:

    Dear ace ,Please Your Views on PIRAMAL ENTERPRISES LTD,Post Restructure real estate and mezzanine funding arms integrated into a larger, more valuable entity in the prelude to a spin-off of the unit ,Please?

  24. Roshan says:

    Hi ace ..finally a new pick🙂..seems like a very long term idea though

  25. RAMKUMAR says:

    Dear Ace, JHS Svendgaard is washing all their previous sins by charging to profit and loss account.Rs100 CR Topline Company , I think year 2016-17 will be the game changer for this company. Thanks for recommending this gem..

  26. Nix Marx says:

    Ace, I hope Arrow Textiles picks up some pace. It’s been languishing for a while now. Even the textile sector stimulus news get little to lift it up.

  27. Ashish Kumar says:

    Thanks for the new recommendation ..
    Any views on Suzlon Sir ?

  28. Prashant says:

    Dear ACEji,
    you mentioned JHS on the blog, but looks like Deccan gold heard you .
    20 % UC again🙂 , within one week.

    Best regards,

  29. Venkatesh says:

    Dear ace, your current view on associated stone.

  30. deepak says:

    ace – ur view on rs software….any revival for this company?

  31. J says:

    your view on Allsec Tech.

  32. Abhishek says:

    Finally it’s out….
    I am big fan of yours. The way you do the research is amazing.

  33. DM says:

    Would like to know your current view on Sharp. It will take a long time for revival but is it a good time to enter in this story? Thanks

    • the stock was suggested at way much lower levels. please look at the stock story and latest news and take your own informed decision. cannot advise on buying or selling that you should be entirely your call based on your own conviction.

  34. Jitendra says:

    Its likely to pass GST. If GST pass, any stock which will be beneficiary from GST.

  35. sir i think it would be nice if in future you can post your new stock story on Friday evening after market hours as people will get 2 days to study the company and take informed decisions. just a suggestion

  36. Jai says:

    Hi Ace

    Your views on Maxwell and Cosmo films

  37. abhinav says:

    Hi ace sir, what’s your view on ricoh India for future? I have invested at higher levels. Should I hold or get out of it?

  38. Niknike says:

    Hi Ace Sir, thank you for your new recommendation. any views on infinite computer solutions? also on JHS, how will the co. withstand competition from Patanjali? thanks

    • infinite computer solutions is average IMHO. everyone is withstanding competition from patanjali though in some categories it has become market leader. dabur has done well. also let’s not forget since patanjali is a customer of JHS any growth of patanjali would also help JHS to an extent.

  39. Cp says:

    Plz advice about moschip

  40. Vetti says:

    Sir, Please share views on Majesco and Mindteck.

  41. Mesh says:

    As you walk with the Guru,
    you walk in the light of Existence,
    away from the darkness of ignorance.
    Happy Guru Purnima

  42. Sang says:

    Happy gurupournima ace. Thanks for being such a wonderful teacher

  43. Krish says:

    Hi Ace Ji,
    JHS is already been a multibagger in one year. Please let me know if this is a good time to buy or should wait for some correction?

    • buying or selling is your own decision. if your stock sense of multibagger is this then you would never invest in stocks like mangalam, waterbase, cupid, sks etc etc… anyways, take your own call that’s more important. Clearly you do not have conviction in the business. God Bless

  44. Rakesh Reddy says:

    What is Ur view on JK tyre.

  45. Sandesh Bhat says:

    Any view on Lloyd electrical and Engineering?

  46. Vaibhav says:

    Thanks for the call Ace. As I research further, I see the company is currently running on 60% capacity utilization. If that has scope to be improved, that would be another plus.

  47. Niraj Bhagtani says:

    Hi Aceinvestor .. Had a small Query .. Do you think the company would be able to Compete in the Oral Care Sector which is Dominated by Large Players like Colgate, P and G, Patanjali and so on .. No Doubt on there contract manufacturing business.

    Lets take a Scenario if a Layman had 50 RS to buy a Toothbrush and Paste .. 9/10 people would go for Colgate, Oral-b , Patanjali or any branded name. How to see the Company competing against that.

    Thanks a lot in advance.

  48. Puru Ji says:

    Hi Ace, just a couple of questions on JHS:
    – can you please advise which market is currently stronger for JHS viz- North or East.
    – Which specific channel do they advertise their product? I am curious as I have not come across with TV ads in Delhi.
    – Are they specifically targeting Metros or Tier-2 cities first for selling their product.

  49. T K THEEPAN says:

    Pl include my mail id in your list.

  50. Krish says:

    Hi Ace Ji,
    I have found that the contingent liability is very high for this company from their AR 2015-16 Page 95.

    31. Contingent liabilities
    I. Claims/litigations made against the Company not acknowledged as debts:
    a. Sales tax demand Nil (Previous Year Nil).
    b. Winding up petition filed against the Company Nil (Previous Year Nil).
    c. Matters under litigation:
    (i) Claims against the Company by employees, vendors & customers amounting to C3,72,38,145 (Previous Year
    (ii) One of the major customers of the Company has wrongfully decided not to renew / terminate the contracts
    across all the business segments due to which certain assets got idle. However, in order to safeguard the interest
    of the shareholders, the Company has been pursuing litigation and has sought specific performance of the
    contract as well against these arbitrary and unjust acts of the multinational company. The Company has filed
    various suits against the said customer amounting to C6,29,99,80,817 (Previous Year C6,29,99,80,817) and vice
    versa said customer has also filed counter claims against the Company amounting to C2,06,14,52,365 (Previous
    Year C2,06,14,52,365).
    The management of the Company believes that the ultimate outcome of these proceedings will not have a material
    adverse effect on the Company’s financial condition and results of operations.
    II. Others:
    Bank Guarantee issued by Bank amounting to C69,10,605 (Previous Year C69,10,605)
    Which amount to 634 cr approx. This is very serious red flag for a small company like this. Can you please highlight the mitigation plan on this?

    • congratulations on the find, but had you put more heed, you might have found the answer to this on this blog itself as this point is discussed in detail only some time back. just blind copy pasting is not good. also not sure how its 634cr though….

      • Krish says:

        I am very new in this investment so need to have a couple of learning yet. The liability is 210Cr not 634 Cr but it still a very high. And if it mature how will they going to manage it? Also I need to know if my concern is at all right or not ?

  51. Ashish says:

    Dear Ace Investor , I am very new to your Blog and what i have seen very good recommendation and stock picks which many big guys are not even able to manage such good ideas. Please suggest which stocks i can still add from your list in my portfolio

    • i dont suggest anything and dont recommend anything. i just give stock stories on stuff i find interesting and its all over the blog. pick, research, build conviction and then see what is to be done.

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