1. At a Glance
Sree Rayalaseema Hi-Strength Hypo Ltd (SRHHL), the Kurnool-based chemical crusader, just served up another quarter of calm chemistry and controlled chaos. With amarket cap of ₹907 crore, the stock now sits at₹528, sulking 22% below its 1-year high of ₹870. But don’t let that fool you—this company is quietly minting profits while most smallcap chem boys are burning cash in the lab.
TheQ2 FY26numbers showsales of ₹182 crore, up 7.14% QoQ, whilePAT stands at ₹24 crore, slipping slightly by 6.09% QoQ. Margins are rock-solid—OPM around 15%, which would make any industrial chemical veteran whistle softly into his sulfuric acid tank. Debt is microscopic at₹12.7 crore, which for a chemical manufacturer is rarer than a safety inspector smiling on site. With aP/E of just 9.07, the stock trades cheaper than a bottle of bleach in its own product line, and aBook Value of ₹588gives it that sweet price-to-book ratio of 0.9.
If you enjoy low-debt, high-margin industrial businesses run by families that still spell “dividend” as “decorative,” welcome aboard.
2. Introduction
If the periodic table had a section for quietly profitable Indian SMEs, Sree Rayalaseema Hi-Strength Hypo would probably be lodged right betweenBoronandBoss Move. Founded in 2005 and tucked away in the chemical corridors of Andhra Pradesh, this company has managed to build a niche empire aroundCalcium Hypochlorite, Stable Bleaching Powder, and Sulphuric Acid—the kind of products you’ll never see in a D2C ad, but without which half your drinking water wouldn’t be safe.
SRHHL isn’t chasing glamour; it’s chasing chlorine. And it’s doing that with textbook efficiency. The company’sreturn on equity (ROE)sits at11%, andROCE at 14.9%—numbers that may not sparkle like hydrogen bubbles, but in this segment, they scream stability.
But wait, there’s drama too. Earlier this year, the Board decided totemporarily stop coal trading, a segment that once contributed 35% of revenue but now feels like a bad Tinder date—expensive, unpredictable, and better forgotten. The company is focusing instead on its bread and butter (or bleach and acid) business, expanding capacity inSodium Methoxide, and experimenting with new products likeSodium Metal.
The result? A tight, efficient operation that’s building a fortress of profitability while everyone else is running in circles trying to “decarbonize.”
3. Business Model – WTF Do They Even Do?
Let’s break it down—SRHHL is essentially India’s unsung hero inindustrial disinfectants and basic chemicals. Think of it as the chemical uncle who supplies half of what your city’s water treatment plant uses to keep cholera away.
Here’s the breakup:
- Chemicals Segment (69% of revenue in FY24):This includes calcium hypochlorite, bleaching powder, sulphuric acid, hydrogen gas, sodium methoxide, and sodium hydride. Basically, everything that smells, stings, and sells in bulk drums.
- Trading (24% of revenue in FY24):This was largelycoal trading, which the company suspended in May 2024 because marketing coal was apparently more volatile than the product itself.
- Power Generation (7% of revenue):The company runs its own10 MW coal plant, a5 MW solar setup, and7 windmillstotaling 11.25 MW. That’s 26 MW of in-house power—enough to run the entire industrial belt of Kurnool during a blackout.
And then there’s theR&D twist. SRHHL has developed an indigenous process forCalcium Hypochloriteusing a sodium-based method that’s more cost-efficient and eco-friendly. Basically, they turned bleach into science fair gold.
The plant in Andhra Pradesh now manufactures over50,000 tonnes per annumof Calcium Hypo, along with aSulphuric Acid capacity of 700 TPDandSodium Methoxide of 1,400 MTPM. If chemistry were a sport, these guys would be quietly topping the domestic league tables while the multinationals fight over IPL ads.
4. Financials Overview
Let’s mix the acids and bases of the P&L first:
| Metric | Latest Qtr (Q2 FY26) | YoY Qtr (Q2 FY25) | Prev Qtr (Q1 FY26) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 182 | 170 | 180 | 7.1% | 1.1% |
| EBITDA (₹ Cr) | 27 | 26 | 28 | 3.8% | -3.6% |
| PAT (₹ Cr) | 24 | 23 | 23 | 4.3% | 4.3% |
| EPS (₹) | 14.2 | 13.2 | 13.6 | 7.6% | 4.4% |
Annualised EPS = 14.2 × 4 =₹56.8, giving a forwardP/E of just 9.3.Even a basic chemical reaction here showsundervaluation written all over it.
Commentary:Revenue grew modestly, but margins held firm. The company runs such tight cost control that even when sales dip, the PAT margin refuses to budge. You can practically feel the accountant’s hand slapping every expense line with “Denied.”
5. Valuation Discussion – Fair Value Range Only
Let’s cook some numbers.
A) P/E Based ValuationIndustry average P/E: 21.4SRHHL P/E: 9.07Annualised EPS: ₹56.8
→ Fair Value Range = ₹56.8 × (12–18) =₹682 – ₹1,022
B) EV/EBITDA MethodEV = ₹506 CrEBITDA = ₹140 Cr (approx full-year extrapolation)EV/EBITDA = 3.61
Peer average = 8–10× EBITDA→ Fair Value Range = (8–10) × ₹140 = ₹1,120–₹1,400 Cr EVAfter adjusting for debt & cash:Fair Value Equity = ₹1,100–₹1,380 Cr → ₹640–₹800/share
C) DCF (Simplified)Assume ₹100 Cr annual PAT, 3% growth, 12% discount rate → intrinsic value ≈ ₹680/share
📘 Fair Value Range (Educational Only): ₹640 – ₹1,020/shareThis fair value range is for educational purposes only and is not investment advice.
6. What’s Cooking – News, Triggers, Drama
The biggest headline from the company’s May 2024 board meeting:“Coal trading stopped.”Apparently, the Board realized that trying to predict coal prices was like trying to predict your ex’s mood swings—expensive and futile.
Then came the power plant drama. In August 2025, SRHHL announced plans toshut down and sell its 10 MW thermal power plant, probably because the plant’s emissions had more mood swings than Sensex during budget week.
Meanwhile,Chairman T.G. Bharath resigned in June 2024, andSmt. T.G. Shilpa Bharathtook over as Chairperson & MD—a family handover that makes the company sound like a soap opera called“Chlorine Ki Kasam.”
On the product front, March
