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Check Before You Invest : Sree Rayalaseema Hi-Strength Hypo Ltd

BSE: 532842 NSE: SRHHYPOLTD ISIN: INE917H01012
  |   Sector:  Chemicals & Fertilizers   |   Industry:  Chemicals

Snapshot

Q.1 Which industry/sub-sector does Sree Rayalaseema Hi-Strength Hypo Ltd belong to?
Sree Rayalaseema Hi-Strength Hypo Ltd belongs to the Chemicals & Fertilizers sector, operating specifically within the Chemicals segment.
Q.2 Is Sree Rayalaseema Hi-Strength Hypo Ltd a good quality company?
Sree Rayalaseema Hi-Strength Hypo Ltd is a good quality company, based on a consistently good multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Sree Rayalaseema Hi-Strength Hypo Ltd undervalued or overvalued?
Sree Rayalaseema Hi-Strength Hypo Ltd appears Overvalued, as its key valuation ratios are higher than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 9.63 8.69
Price to Book 0.88 1.22
Price to Sales 1.38 0.80
EV to EBITDA 3.42 4.09
Q.4 Is Sree Rayalaseema Hi-Strength Hypo Ltd a good buy now?
Sree Rayalaseema Hi-Strength Hypo Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Sree Rayalaseema Hi-Strength Hypo Ltd?
Sree Rayalaseema Hi-Strength Hypo Ltd revenue growth is -26.4% for FY-2025, which is below its 5-year CAGR of -1.53%, indicating slower growth.

Q.2 Gross Profit margin of Sree Rayalaseema Hi-Strength Hypo Ltd?
Sree Rayalaseema Hi-Strength Hypo Ltd Gross profit margin which is the profit after deduction of direct costs, is 20.9% for FY-2025, which is above its 5-year median of 14.4%, indicating increasing margins.

Q.3 Operating Profit Margin of Sree Rayalaseema Hi-Strength Hypo Ltd?
Sree Rayalaseema Hi-Strength Hypo Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 14.99% for FY-2025, which is above its 5-year median of 12.78% indicating increasing margins.

Q.4 Net Profit Margin of Sree Rayalaseema Hi-Strength Hypo Ltd?
Sree Rayalaseema Hi-Strength Hypo Ltd Net Profit Margin is 14.53% for FY-2025, is above its 5-year median of 9.29%, indicating increasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 20.9 14.4
Operating Profit Margin (%) 14.99 12.78
Net Profit Margin (%) 14.53 9.29

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Sree Rayalaseema Hi-Strength Hypo Ltd?
Sree Rayalaseema Hi-Strength Hypo Ltd Return on Asset is 8.89%, which is below its 5-year historical median of 11.52%, indicating deteriorated asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Sree Rayalaseema Hi-Strength Hypo Ltd?
Sree Rayalaseema Hi-Strength Hypo Ltd Return on capital employed is 14.64% for FY-2025, which is below its 5-year historical median of 21.42%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 14%, indicating value creation.

Q.7 Return on Equity (ROE) of Sree Rayalaseema Hi-Strength Hypo Ltd?
Sree Rayalaseema Hi-Strength Hypo Ltd Return on equity is 10.75% for FY-2025, which is below its 5-year historical median of 17.32%, indicating the business is making worse use of its shareholders capital.

Q.8 Cash conversion cycle of Sree Rayalaseema Hi-Strength Hypo Ltd?
Sree Rayalaseema Hi-Strength Hypo Ltd Cash conversion cycle is 71 days, above its 5-year historical median of 46 days, indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 0.61 1.69
ROE (%) 10.75 17.32
ROCE (%) 14.64 21.42
Cash Conversion Cycle 71 days 46 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Sree Rayalaseema Hi-Strength Hypo Ltd?
Sree Rayalaseema Hi-Strength Hypo Ltd Debt-to-Equity ratio is 0.00, which is lower the industry average of 0.13, indicating lower debt levels in the industry.

Q.10 Debt to cash flow from operations of Sree Rayalaseema Hi-Strength Hypo Ltd?
Sree Rayalaseema Hi-Strength Hypo Ltd Debt to cash flow from operations is 0.02, which is at a healthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Sree Rayalaseema Hi-Strength Hypo Ltd?

Q.1 Promoter shareholding and pledge status of Sree Rayalaseema Hi-Strength Hypo Ltd?
Promoters hold 61.84% of the Sree Rayalaseema Hi-Strength Hypo Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Sree Rayalaseema Hi-Strength Hypo Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Sree Rayalaseema Hi-Strength Hypo Ltd vs industry peers?
Sree Rayalaseema Hi-Strength Hypo Ltd revenue CAGR is -1.53%, compared to the industry median CAGR of 7.53%, indicating slower growth and losing its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) -26.4 7.5
Gross Profit Growth (%) 2.3 12.1
Operating Profit Growth (%) -14.4 11.7
Net Profit Growth (%) 16.3 9.7
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 0.61 0.93
ROE (%) 10.75 10.17
ROCE (%) 14.64 12.96
Cash Conversion Cycle (days) 70.79 62

Valuation & price assessment

Q.1 Stock return of Sree Rayalaseema Hi-Strength Hypo Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of 21.7% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR
21.7% 12% 4.3% -8.1%
Q.2 Valuation ratios of Sree Rayalaseema Hi-Strength Hypo Ltd vs historical?
The current P/E ratio of 9.63 is higher than its historical median of 8.69, indicating that the stock is trading above its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median
5-year
Industry Median
Price to Earnings 9.63 8.69 28.17
Price to Book 0.88 1.22 2.22
Price to Sales 1.38 0.80 1.93
EV to EBITDA 3.42 4.09 14.20

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