It's Unlikely That The Andhra Sugars Limited's (NSE:ANDHRSUGAR) CEO Will See A Huge Pay Rise This Year

Key Insights

• Andhra Sugars to hold its Annual General Meeting on 25th of September
• CEO Pendyala Chowdary's total compensation includes salary of ₹5.03m
• The overall pay is 228% above the industry average
• Andhra Sugars' EPS declined by 9.6% over the past three years while total shareholder return over the past three years was 109%

The Andhra Sugars Limited (NSE:ANDHRSUGAR) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 25th of September. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Andhra Sugars

How Does Total Compensation For Pendyala Chowdary Compare With Other Companies In The Industry?

Our data indicates that The Andhra Sugars Limited has a market capitalization of ₹16b, and total annual CEO compensation was reported as ₹78m for the year to March 2023. We note that's an increase of 8.7% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹5.0m.

On comparing similar companies from the Indian Chemicals industry with market caps ranging from ₹8.3b to ₹33b, we found that the median CEO total compensation was ₹24m. Hence, we can conclude that Pendyala Chowdary is remunerated higher than the industry median. What's more, Pendyala Chowdary holds ₹2.5b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	₹5.0m	₹3.6m	6%
Other	₹73m	₹68m	94%
Total Compensation	₹78m	₹72m	100%

Talking in terms of the industry, salary represented approximately 86% of total compensation out of all the companies we analyzed, while other remuneration made up 14% of the pie. Andhra Sugars sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at The Andhra Sugars Limited's Growth Numbers

The Andhra Sugars Limited has reduced its earnings per share by 9.6% a year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has The Andhra Sugars Limited Been A Good Investment?

Most shareholders would probably be pleased with The Andhra Sugars Limited for providing a total return of 109% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Andhra Sugars that investors should think about before committing capital to this stock.

Important note: Andhra Sugars is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.