Sree Rayalaseema Hi-Strength Hypo Limited ~~ IMMEDIATE BUY

Business : Today it’s CRUDE oil; Tomorrow it will be WATER… Yes folks, the next burning issue on our planet – CLEAN & SAFE water.

Today, I introduce a pioneer in water treatment industry, a commodity chemicals player - SREE RAYALASEEMA HI-STRENGTH HYPO LTD (SRHHL) - the torchbearer of the TGV Group, is the only manufacturer & exporter of Calcium Hypochlorite in India and among a few in the world. Welcome to TGV Group, growing leap & bounds under 3 decades old versatile leadership of T G Venkatesh, this group is diversifying big time into Pharmacy & healthcare, hospitality & education, Power & infrastructure along with manufacturing & exports. Constantly raising standards in water purification, SRHHL leads others by an example. What’s the buzz about Calcium Hypochlorite - Calcium hypochlorite is arguably the best chemical disinfectant for water far better than our household bleach {sodium hypochlorite}. Besides being used for disinfection plants of drinking water, it is used heavily as a sanitizer in outdoor swimming pools, as an ingredient in our daily bleaching powder & also used in bathroom cleaners, household disinfectant sprays, moss and algae removers etc. SRHHL's Aquafit brand is very popular, high grade calcium hypochlorite which has very wide applications in swimming pools and drinking water treatment bodies.

“A 1-pound pag of calcium hypochlorite in granular form can treat up to 10,000 gallons of drinking water.”

            Apart from Calcium Hypochlorite, SRHHL manufactures other highly useful chemicals with their annual capacities listed below : 

Product	Installed Capacity (Tons per annum)
Calcium Hypochlorite	19800
Stable Bleaching Powder	14850
Monochloro Acetic Acid	5445
Sulphuric Acid	49500
Chlorosulphonic Acid	26400
Bromine	65

Financials : The company is progressively witnessing a complete turnaround this FY. For a change, this time I present the company financial figures in a tabular chart below :

SRHHL	Sept Q	June Q	Half Year FY11	Projected FY11
Revenues (crores)	55.2	53.0	109.8	200+
Net Profit (crores)	8.0	6.4	14.4	25+
EPS	7.7 (0.37)	6.1 (4.0)	13.8 (4.3)	20+ (3.2)

Looking at the prolific figures above & assuming sustained growth one can expect a target of 150 Rs in another 6-7 months. At current price of 63 Rs – SRHHL is available at a PE of around 3 anticipating a forward FY11 EPS of 20+ The stock is a IMMEDIATE BUY!!

Positives – The company has a very strong SHP which has increased from 36% to about 46% in last 3 years since its listing on BSE in 2007

-        The demand of Calcium Hypochlorite is growing fast in international market.

-        Most of the raw materials are easily available locally because of its another listed group company (Sree Rayalaseema Alkalies & Allied Chemicals Ltd) thus saving all logistic cost.

-        There are no competitors for manufacture of Calcium hypochlorite.

-        Well, water treatment chemicals are also included in the same sector as water treatment holding same kind of importance and presents same kind of growth prospects.

Negatives – It’s a non-dividend paying company so far, but if you look at the extent of expansion prospects, I feel SRHHL seems to be retaining back the entire profit so that it could be deployed for further expansion projects. This seems to be a strong point in favor of shareholders.

Conclusion : The stock is already on a rally and has reached 63-68 levels. Time to HURRY to buy SREE RAYALASEEMA HI-STRENGTH HYPO LTD at current levels before FII/DII start doing so. This stock seems to be a value pick from all perspectives & one can expect 200 – 300% returns in 1 yrs time visualizing an EPS of 20+ this FY.