At a Glance
Sree Rayalaseema Hi-Strength Hypo Ltd is a midcap chemical company making calcium hypochlorite, sulphuric acid, and stable bleaching powder. Despite zero net debt and solid ROCE of 15%, sales have crashed 50% in 2 years. The recent resignation of its promoter-chairman raises eyebrows.
1. Introduction with Hook 🔥
Picture this: You’re running a bleach chemical business. Demand spikes during COVID. You expand. Sales shoot past ₹1,600 Cr.
Then boom — post-2023, sales literally halve. 👀
Margins survive. But now the chairman resigns.
What gives?
Welcome to the bizarre and bleachy world of Sree Rayalaseema Hi-Strength Hypo Ltd (SRHHL).
2. WTF Do They Even Do? 🧩
SRHHL makes:
- Calcium hypochlorite – the OG disinfectant
- Stable Bleaching Powder (SBP) – for textile, water purification
- Sulphuric acid, oleum, chlorosulphonic acid
- Hydrogen peroxide & derivatives
Major consumers: paper, textiles, water treatment, pharma, public health.
They also used to dabble in coal trading — but stopped that in May 2024.
Maybe the real bleach was in the books? 🧂
3. Financials Overview – Profit, Margins, ROE 📊
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 1,650 | 866 | 638 |
| Net Profit (₹ Cr) | 154 | 80 | 93 |
| EBITDA Margin | 11% | 13% | 15% |
| ROE | 19% | 11% | 11% |
- Sales have collapsed 60% in 2 years.
- But margin discipline has kept profit from evaporating.
- ROE is still double digits thanks to low equity and high efficiency.
4. Valuation – Is It Cheap, Meh, or Crack? 🧠
- CMP: ₹635
- EPS (FY25): ₹53.99
- P/E: ~11.5x
- P/BV: 1.18x
- ROE: 11%
🎯 Fair Value Range: ₹480–₹600
➡️ Based on 9–11x FY26E EPS (assuming flat ₹55) — conservative, because sales haven’t recovered.
At face value, it looks cheap. But so does expired bleach. 💀
5. What’s Cooking – News, Triggers, Drama 🍿
- 🧼 Coal Trading Shut: In May 2024, board axed their coal trading biz. Was it profitable? No one knows. But it’s out.
- 🧑💼 Chairman Exit: T.G. Bharath (also ex-MD) resigned in June 2024. The next day, Smt. T.G. Shilpa Bharath becomes Chairperson. 👀 Family succession or internal power struggle?
- 🧴 Chemical Capex? — Crickets. No mention of expansion plans.
- 💰 Other income of ₹36 Cr in FY25 — almost 40% of net profit! Why?
🕵️ Something smells fishy — and it’s not just chlorine gas.
6. Balance Sheet – How Much Debt, How Many Dreams? 🏦
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity Capital | ₹17 Cr | ₹17 Cr | ₹17 Cr |
| Reserves | ₹734 Cr | ₹785 Cr | ₹905 Cr |
| Borrowings | ₹16 Cr | ₹5 Cr | ₹14 Cr |
| Total Liabilities | ₹941 Cr | ₹907 Cr | ₹1,059 Cr |
✅ Net Debt ≈ Zero
📈 Reserves have grown consistently
📦 Assets ~ ₹1,059 Cr with no flashy revaluation tricks
7. Cash Flow – Sab Number Game Hai 💵
| Year | CFO (₹ Cr) | Capex (₹ Cr) | Net Cash |
|---|---|---|---|
| FY23 | ₹131 Cr | ₹99 Cr | ₹12 Cr |
| FY24 | ₹132 Cr | ₹8 Cr | ₹103 Cr |
| FY25 | ₹89 Cr | ₹40 Cr | ₹39 Cr |
- Very healthy CFO despite revenue drop.
- FY24 cash jump due to capex cut and other income.
Not a cash cow, but definitely not cash-starved.
8. Ratios – Sexy or Stressy? 💅
| Metric | FY25 |
|---|---|
| ROCE | 14.8% |
| ROE | 11% |
| OPM | 15% |
| Working Cap Days | 81 |
| CCC (days) | 85 |
⚠️ Cash conversion worsening — from 50 to 85 days.
📉 Working capital stress + growing receivables = tighter ops?
9. P&L Breakdown – Show Me the Money 💸
| FY | Sales (₹ Cr) | EBITDA (₹ Cr) | PAT (₹ Cr) |
|---|---|---|---|
| FY22 | 1,267 | 149 | 103 |
| FY23 | 1,650 | 180 | 154 |
| FY24 | 866 | 111 | 80 |
| FY25 | 638 | 96 | 93 |
Wait — profit went up in FY25 despite lower revenue?!
Blame (or bless) Other Income = ₹36 Cr
10. Peer Comparison – Who Else in the Game? 🧪
| Company | P/E | ROCE (%) | OPM (%) | M.Cap (₹ Cr) |
|---|---|---|---|---|
| GNFC | 13.5 | 9.6 | 7.8 | 8,075 |
| GHCL | 9.8 | 24.2 | 27.6 | 5,868 |
| Deepak Fert | 21.8 | 16.0 | 18.7 | 20,336 |
| SRHHL | 11.5 | 14.8 | 15.0 | 1,090 |
🧼 SRHHL is small, clean, conservative.
But lacks scale or clear visibility like peers.
11. Miscellaneous – Shareholding, Promoters & Mystery Box 🎁
| Category | Jun 2022 | Mar 2025 |
|---|---|---|
| Promoters | 62.09% | 61.84% |
| FIIs | 0.14% | 0.14% |
| Public | 37.7% | 38.0% |
- No mutual funds, no big FIIs.
- Fully operator-proof or fully ignored?
Also — 45,000 shareholders, but no buzz? That’s quiet… too quiet.
12. EduInvesting Verdict™ 🧑⚖️
✅ Clean balance sheet
✅ Margins and ROCE healthy
✅ Valuation looks okay on paper
❌ Sales have crashed, growth is MIA
❌ Chairman exited suddenly
❌ Other income ≈ profit = 🤔
📉 Fair Value Range: ₹480–₹600
📍 CMP: ₹635 = priced slightly ahead of fundamentals.
This stock might bleach your brain if you try to forecast it.
Proceed only if you like mysterious midcaps with clean books, murky outlooks, and surprising CFOs.
✍️ Written by Prashant | 📅 July 9, 2025
Tags: Sree Rayalaseema Hi-Strength Hypo, Chemicals, Chlorine Stocks, Dividend Smallcap, Hidden Gems, Operator Zone
