Sree Rayalaseema Hi-Strength Hypo Ltd

Current Market Price-: 328 Rs

Sree Rayalaseema Hi-Strength Hypo Ltd, with a negligible amount of debt ,the torchbearer of the TGV Group and is the only Indian manufacturer of Calcium Hypochlorite as claimed by the management . It is engaged in manufacturing and sale of industrial chemicals, generation & distribution of power and coal trading.

Sree Rayalaseema Hi-Strength Hypo Limited is an India-based manufacturer of both organic and inorganic chemicals. The Company is engaged in manufacturing and sale of industrial chemicals, generation & distribution of power and coal trading. It operates through two segments: Chemicals and Power generation. The Company generates power through wind and thermal. It has three state-of-art plants located at Andhra Pradesh and Its windmill power units are situated in Tamil Nadu.

Incoporated in the year 1986, today as claimed by the management, Sree Rayalaseema Hi-Strength Hypo is the only Indian manufacturer of Calcium Hypochlorite. Sree Rayalaseema Hi-Strength Hypo is one of the very few in the world, known for decades of dedicated research and development in water treatment and purification. Company has developed a state-of-the-art sodium process technology through in-house R&D efforts which helps the company in manufacturing the product with a chlorine content of 65% to 70%.

Sree Rayalaseema Hi-Strength Hypo exports Calcium Hypochlorite to countries all across the globe viz., Australia, Bangladesh, Belgium, Brunei, China, Colombia, Cyprus, Durban, England, France, Germany, Hungary, Iran, Kenya, Korea, Malaysia, Mauritius, Netherlands, Oman, Peru, Philippines, Quatar, Sri Lanka, Saudi Arabia, Singapore, Tanzania, Thailand, USA, Vietnam etc. 

The Certificate of Merit awarded by CHEMEXCIL for outstanding export performance reinforces its status as a recognised export house. 

Sree Rayalaseema Hi-Strength Hypo has a distinctive edge in the manufacture of this product, thanks to the twin advantages of indigenous raw materials’ availability and supply of some specialised chemicals by Sree Rayalaseema Alkalies and Allied Chemicals Ltd.

The company is also a front-ranking producer of Monochloro Acetic Acid. Manufactured by the scientific crystallizer technology, the product meets international quality standards. Monochloro Acetic Acid is used by all leading manufacturers of Non-Steroid Anti-Inflammatory Drugs, other pharmaceuticals, pesticides, organic chemicals etc.

TGV Group-

It was founded by Mr Mr T G Venkatesh. He is known for pioneering of the Bipolar Membrane Cell Technology in the manufacture of Caustic Soda and allied products in India. He was honoured as the Jaycees Man of the Year for his invaluable contribution to social welfare. He is also recipient of The Best Entrepreneur Award, FICCI Award, Industrial Promotion Award, Kinnera Award, Vijayshree Award, Udyogshree Award, Rajiv Ratna Award and scores of others. The Best Sales Tax payer Award stands testimony to his commitment as a responsible Indian citizen. 

Innovation & Technology Sree Rayalaseema Hi-Strength Hypo Ltd has involved itself for decades on research and developments in water treatment and purification. It has constantly raised its standards and today, it serves as the global benchmark in water purification.

Business/Products Manufactured

• Sulphuric Acid-: Dehydrating Agent, In Process Industries, Exacting purity for the storage acid, battery acid, rayon acid, dye-intermediate acid and pharmaceuticals, Steel, heavy chemicals and fertilizer industries.
• Aquafit-Calcium Hypochlorite (Granules and Tablets) 
• Stable Bleaching Powder -: In Shrimp Farming, Textile Industries, Purification of    Drinking Water, Sanitation of Swimming Pools, Meat    Processing Units
• Monochloro Acetic Acid Manufacture of C.M.C. S.C.M.C. & S.M.C.A.    Sequestering agents like E.D.T.A. Herbicides    like 2, 4-D and 2-4-3 etc.
• Chlorosulphonic Acid -: Pharmaceuticals, dyes & Intermediaries industries.
• Oleum 23%, 30%and 65% -: Producers of dyes and intermediaries, soaps and detergents, explosives and others
• Aluminium Sulphate Battery and 
• Commercial grades Sulphuric acid
• Bromine-: Petrochemicals, dye intermediates, photography, pesticides, pharmaceuticals, bleaching of paper, pulp and others
• Hydrochloric Acid -: OSIN Manufacturing, Bone Washing and General Chemicals
• Sodium Hypo Aluminium  Sulphate  -17% (Non-Ferric) Lumps / Granular / Powder-: Flocculating agent in raw water clarification, Soap manufacturing units,  Paper  manufacturing  Units for sizing,  Leather tanning industries.
• Hydrogen  Gas  (Mercury Free)-: 
  • Hydrogenation of vegetable oils.
  • Manufacturing of Liquid Glucose, Reducing agent in metallurgy and pharmaceutical industries.
  • Manufacturing of Tungsten components, incandescent lamps.
  • Filling of high flying balloons, flight balloons
  • Thermal power stations, Turbine cooling.
  • Manufacturing of Alcohol from fatty acids.
  • Protective atmosphere/cover over metal baths in glass industry.

Production Capacity Table

Aquafit

Water is life’s matter and Matrix, mother and medium. It touches billions of lives daily, quenching their every need- from the very act of living to cleansing, from production to recreation. Aquafit ,a high grade Calcium Hypochlorite has very wide application in swimming pools and drinking water treatments. It is one of the few in the world and the only one in India, to manufacturer and export Calcium Hypochlorite of 65% – 70 % Min Chlorine content.

Applications

• Sanitization-: Aquafit is effectively chlorinates swimming pool water to make it free from bacteria and prevents growth of algae. It makes pool water hygienic and crystal clear.
  • Sanitization of Swimming pools
  • Swimming pools WATER DISINFECTION
  • SPAS HOT-TUBS IMMERSION TANKS ETC
  • Sanitization of porous Non-food contact surfaces
  • Disinfection of Nonporous Non-food contact surfaces
  • HOTELS / RESTAURENTS: Aquafit is commonly used in cleaning of Tea stained cups and disinfection and bleaching etc., of napkins, towels, in laundries located in the hotels. HOSPITALS : Aquafit is used in disinfecting of sick rooms, bath rooms, toilets, floors etc., in the hospitals. The wastes coming out of the hospital are also treated with Aquafit solution for safe disposal.

• Hypochlorination -: Aquafit is an excellent disinfecting chemical for the treatment of potable water.It works as a germicide and kills all harmful bio-organisms present in the water. It destroys all the organic materials present  and makes water suitable for human consumption.
  • DISINFECTION OF DRINKING WATER (EMERGENCY / PUBLIC / INDIVIDUAL SYSTEMS
  • PUBLIC WATER SYSTEMS

• Aquaculture and Processing -: Aquafit can be extensively used in Fish Hatcheries, lobster ponds, Fish Ponds, and fish processing plants. Aquafit creates hygienic environment by killing harmful bacteria and controlling the growth of algae which will help to accelerate the breeding and yield of sea food like fish, prawns and shrimps.
  • CONTROL OF SCAVENGERS IN FISH HATCHERY PONDS

• Canneries -: Aquafit is used for disinfecting the cooling water which is required for cooling of freshly packed food containers in canneries.

• Water Treatment -: Cooling towers, Cooling ponds and reservoirs generally face the problem of slimes. The problem is solved by dozing Aquafit solution of suitable concentration under close monitoring. The Aquafit is useful in preventing growth of algae over cooling tower distributors and improve the efficiency of process by keeping the pipelines and cooling equipments in good condition.
  • SEWAGE AND WASTEWATER EFFLUENT TREATMENT

• Fruits and Vegetables-: Aquafit solution of suitable concentration is utilized in washing fruits or vegetables before their packaging. This helps to control harmful bacteria and fungi that contaminate the fruits and vegetables It also improves the keeping qualities of vegetables. Growing Mushrooms are protected from diseases by using Aquafit. The potatoes and sweet potatoes are treated with Aquafit to prevent soft rot.
  • AGRICULTURAL USES
  • POST-HARVEST PROTECTION
  • FOOD EGG SANITIZATION
  • FRUIT & VEGETABLE WASHING

• Industries
  • PAPER -: Aquafit is widely used as bleaching agent  for wood pulp and straw in paper industries. The good quality papers are  bleached with Aquafit to improve whiteness of paper.
  • LEATHER-: Aquafit is utilized for curing raw hides and also for extra shine of leather goods.
  • SUGAR-: Aquafit is used in sugar industry for disinfecting vessels and pipelines.
  • TEXTILES-: Aquafit is used in bleaching cotton, Cotton yarn and hemp. It removes coloring material (lignin) from cotton and imparts brightness to the yarn. Bleaching is essential before dying of yarns or oven fabrics, garments etc.
  • POLUTARY PLANTS-: Aquafit effectively controls odor and bacterial growth in poultry plants. Regular treatment is required with Aquafit to sanitize poultry feeding areas, dropping boards, feeding troughs and watering channels. Aquafit is further used to control bacteria on contaminated eggs and sanitize all the equipments and places involved in egg breaking operations. It is desired that all utensils devices and equipments that come in contact with “off’ should be thoroughly cleaned and disinfected with Aquafit. It is also required to deodorize the egg breaking rooms walls and floors using Aquafit solutions of suitable concentration.
• Industrial Cyanide Waste -: Aquafit has been found most effective chemical to destroy the cyanates present in industrial liquid wastes. It converts the toxic cyanates into harmless cyanates. The cyanates containing solid industrial wastes can also be treated using Aquafit by dissolving into water.  
• Dairy Units -: A good hygienic environmental inside dairy is very essential to keep milk and milk products away from contamination and also to control mold and mildew to waste. Aquafit is very useful to keep dairy environment hygienically rich. Almost all the equipments are sanitized by using Aquafit solution to control contamination.
• Meat Processing Units -: Meat processing units have a problem of bad odor which is controlled by disinfecting killing rooms, inedible rooms, edible rooms and related equipments and utensils with the help of Aquafit solution. The wastes generated from meat processing plants are also disinfected with Aquafit.
• Breweries -:  Aquafit is useful in the breweries plants for general sanitization and cleaning of pipelines, storage tanks and other equipments. It is further used to disinfect the plant water for manufacturing of beer. Aquafit is also used to effectively control slime and odors in pasteurizers, malting areas.
• Emergency Disinfection After-:
  • Floods
  • Fire
  • Droughts
  • Main Breaks.

Financials

• 

• 

• 

• 

• 

• 

Financial Results (Q4 FY20-21) – QoQ Comparison

• The company has reported total income of Rs.310.17 crores during the period ended March 31, 2021 as compared to Rs.207.45 crores during the period ended December 31, 2020.
• The company has posted net profit of Rs.14 crores for the period ended March 31, 2021 as against net profit of Rs.17 crores for the period ended December 31, 2020.
• The company has reported EPS of Rs.7.91 for the period ended March 31, 2021 as compared to Rs.10.04 for the period ended December 31, 2020.

Financial Results (Year ended FY 20-21) – YoY Comparison

• The company has reported total income of Rs.917.45 crores during the 12 months period ended March 31, 2021 as compared to Rs.693.01 crores during the 12 months period ended March 31, 2020.
• The company has posted net profit of Rs.60.57 crores for the 12 months period ended March 31, 2021 as against net profit of Rs.37.90 crores for the 12 months period ended March 31, 2020.
• The company has reported EPS of Rs.35.29 for the 12 months period ended March 31, 2021 as compared to Rs.22.08 for the 12 months period ended March 31, 2020.
• Company has been maintaining stable operating profit margins in range of 14-15%.
• Despite the pandemic , lockdowns over the past year company has managed to perform extremely well with profits increasing by almost 32% year on year basis.
• Debt levels of the company has been steady with slight increase as compared to previous levels which is well within the manageable limits.
• Cash balance of the company has soared by 61% as compared to the previous year. Currently cash and equivalents held by the company is Rs 139 crores against cash balance of Rs 89 crores as of March 2020.
• Reserves have increased by almost 20% over the last year to Rs 371 crores.
• Despite increase in the stock price of the company by 168% in 1 year the stock trades at relatively cheap valuations as compared to its peers. It trades at around PE of 8 while company peers trades in range of 18-20 Pe.
• Book value of the stock is 226 Rs thus the stock trades at Price to book of just 1.45.
• Apart from that company holds around 2.05 crore shares of TGV Saarc valued at Rs 72 crores as per the current market price of the stock.

Dividend

The Board of Directors of Sree Rayalaseema Hi-Strength Hypo Limited has recommended the payment of dividend @30% on paid up share capital of the Company i.e., Rs. 3.00 per equity share of face value of Re. 10/- each for the financial year ended 31st March, 2021, subject to approval of the shareholders at the ensuing Annual General Meeting.

Conclusion

Sree Rayalaseema Hi-Strength Hypo Ltd, has a negligible amount of debt and it is among the few Companies in the world having dedicated R&D for products in water treatment and purification. Also as claimed by the management it is the only Indian manufacturer of Calcium Hypochlorite in India . The products of the Company have wide applications ranging from non-steroid anti inflammatInory drugs, pharma, pesticide, fertilizer, organic chemicals, etc. Despite pandemic and lockdowns company has managed sales growth of 30% which in itself is a huge achievement . Additionally the stock trades at very cheap valuation of just PE of 8 as compared to some of its peers such as Aarti , Atul Industries , Alkyl Amines etc which trade at significant high valuations of 60-80 PE thereby leaving huge room for expansion in the valuation multiples for Sree Rayalaseema Hi-Strength Hypo Ltd.

(Please note Peers have been taken into view considering the broader sectorial view of the companies engaged in the chemical sector. For more detailed peer view comparison users are requested to do their own analysis and not put any queries for the same)