Sree Rayalaseema Hi-Strength Hypo Limited

Basic Materials — Chemicals · NSE

₹529.90+₹1.45 (+0.27%)

DalalBaazaar Score

55 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

Driven by moderate debt load, micro-cap size, which brings thin liquidity.

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Nothing obvious stands out as stretched — the usual checks on business quality and management still apply.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

The 60-second version of Sree Rayalaseema Hi-Strength Hypo Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Sree Rayalaseema Hi-Strength Hypo Limited produces and sells industrial chemicals in India. The company operates in two segments, Chemical Manufacturing and Wind Power Energy.

IndustryChemicals

SectorBasic Materials

Employees392

Annual revenue₹664 Cr

How does it make money?

Turns over ₹664 Cr a year. Of every ₹100 of sales, about ₹14 reaches shareholders as profit, with ₹20 left at the operating level before interest, tax and depreciation. Each of its 392 employees supports ₹1.70 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.70 Cr

Who are its competitors?

The closest listed comparisons in its industry are PIDILITE INDUSTRIES LTD, SRF LTD, UPL LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 11.5% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE15.4%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved -60% while net margin moved +47% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect-60%

Margin effect+47%

DalalBaazaar Score

55/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 26.1% a year
✗ Profit has declined at 16.0% a year

Quality vs. Valuation

Company Quality

49/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

81/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

9.8x

3Y Median

9.9x

40 monthly readings · mean 9.9x · range 5.5x–16.9x

Sector Median

33.8x

median of 3 sector peers

🟡Currently trading close to its 3y median of 9.9x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 71% below the peer median of 33.8x.

vs. its own history

Fair

9.9x median over 40 months · -1%

vs. sector peers

Cheap

33.8x median of 3 peers · -71%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

3.6x

PEG

0.87

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from 11.5% to 20.4% over 3 years.
Debt is being paid down
Total debt is down 39% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 20.5% to 9.4% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 23.8% to 11.5% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🟡Profit is decliningFinancial
Net profit is down 41% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 11.5% to 20.4%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 39% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Cheaper than its peers
It trades 71% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Returns on shareholder capital are falling
ROE has dropped from 20.5% to 9.4%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 18%✓ 20.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✓ ₹33 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 0.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 9%✓ 11.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Valuation vs its own median of 9.9x✓ 9.8x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

8 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 5 neutral · 0 weak

Market Cap

₹910 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

9.8x

Cheap

Cheap against the generic band

P/B Ratio

0.94x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹53.97

Profitable

Profitable on a per-share basis

ROE

9.4%

Moderate

Moderate capital efficiency

ROCE

11.5%

Moderate

Moderate return on the capital in the business

Debt/Equity

1.18x

Moderate

Moderate leverage

Revenue Growth (YoY)

17.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

11.3%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.57%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹33 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

28.2x

Flat

At or above the trailing multiple — no earnings uplift is being priced in

Operating Margin

13.3%

Average

Average margins

Net Margin

13.2%

Good

Strong bottom-line conversion

Current Ratio

10.51

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.43

Defensive

Steadier than the market

52W Range Position

51%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

559.2 / 523.4

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

25.2

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,645 Cr	₹862 Cr	₹635 Cr	₹664 Cr	-26.1%
EBITDA	₹190 Cr	₹129 Cr	₹128 Cr	₹136 Cr	-10.6%
EBITDA Margin	11.5%	15.0%	20.1%	20.4%	—
PAT (Net Profit)	₹154 Cr	₹79 Cr	₹90 Cr	₹91 Cr	-16.0%
EPS	₹89.87	₹46.06	₹52.47	₹53.27	-16.0%
ROE	20.5%	9.9%	9.8%	9.4%	—
ROCE	23.8%	12.6%	12.0%	11.5%	—
Total Debt	₹19 Cr	₹13 Cr	₹16 Cr	₹12 Cr	-15.4%
Free Cash Flow	₹133 Cr	₹120 Cr	₹63 Cr	₹33 Cr	-37.3%

🔴 Revenue has shrunk at 26.1% a year over 3 years.

🔴 EBITDA has shrunk at 10.6% a year over 3 years.

🟢 EBITDA Margin has risen from 11.5% to 20.4% over 3 years (+8.9 pts).

🔴 PAT (Net Profit) has shrunk at 16.0% a year over 3 years.

🔴 EPS has shrunk at 16.0% a year over 3 years.

🔴 ROE has fallen from 20.5% to 9.4% over 3 years (-11.1 pts).

🔴 ROCE has fallen from 23.8% to 11.5% over 3 years (-12.2 pts).

🟢 Total Debt has shrunk at 15.4% a year over 3 years.

🔴 Free Cash Flow has shrunk at 37.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,115 Cr

Total Liabilities

₹131 Cr

Cash & Equivalents

₹434 Cr

Operating Cash Flow

₹39 Cr

Capex

-₹6 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

69.3%

Corporate Actions

Dividend Rate

₹3

Ex-Dividend Date

18 Sept 2026

Peer Comparison

Company	P/E	ROE
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

2 positive4 general

Sree Rayalaseema Hi-Strength Hypo (SRHHYPOLTD.NS) Slips 2.02% to ₹563.9, Sitting Midway Between Key Support and Resistance - Bull Flag

siam.in, 30 Sept

Why You Might Be Interested In Sree Rayalaseema Hi-Strength Hypo Limited (NSE:SRHHYPOLTD) For Its Upcoming Dividend

Simply Wall Street, 14 SeptCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Sree Rayalaseema Hi-Strength Hypo Ltd Technical Momentum Shifts Amid Mixed Market Signals

MarketsMojo, 13 Oct

Sree Rayalaseema Hi-Strength Hypo sets Sep 26 AGM, recommends ₹3 dividend

scanx.trade, 26 SeptCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Sree Rayalaseema Hi-Strength Hypo Ltd leads gainers in 'B' group

Business Standard, 21 Sept

Sree Rayalaseema Hi-Strength Hypo Ltd. Upper Circuit: Price and Key Data

Univest, 21 Sept

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongFinancial Health · Valuation

MiddlingBusiness Quality · Profitability · Risk

WeakGrowth

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 1 high-severity red flag sits above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑