How Should Investors React To Sree Rayalaseema Hi-Strength Hypo Limited’s (NSE:SRHHYPOLTD) CEO Pay?

The CEO of Sree Rayalaseema Hi-Strength Hypo Limited (NSE:SRHHYPOLTD) is Tumbalam Bharath. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Sree Rayalaseema Hi-Strength Hypo

How Does Tumbalam Bharath’s Compensation Compare With Similar Sized Companies?

According to our data, Sree Rayalaseema Hi-Strength Hypo Limited has a market capitalization of ₹2.9b, and pays its CEO total annual compensation worth ₹24m. (This figure is for the year to March 2018). Notably, the salary of ₹24m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under ₹14b, and the median CEO compensation was ₹1.3m.

As you can see, Tumbalam Bharath is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Sree Rayalaseema Hi-Strength Hypo Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Sree Rayalaseema Hi-Strength Hypo has changed from year to year.

NSEI:SRHHYPOLTD CEO Compensation, March 11th 2019
NSEI:SRHHYPOLTD CEO Compensation, March 11th 2019

Is Sree Rayalaseema Hi-Strength Hypo Limited Growing?

Sree Rayalaseema Hi-Strength Hypo Limited has increased its earnings per share (EPS) by an average of 24% a year, over the last three years (using a line of best fit). Its revenue is up 158% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Sree Rayalaseema Hi-Strength Hypo Limited Been A Good Investment?

Most shareholders would probably be pleased with Sree Rayalaseema Hi-Strength Hypo Limited for providing a total return of 205% 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.

In Summary…

We compared total CEO remuneration at Sree Rayalaseema Hi-Strength Hypo Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Sree Rayalaseema Hi-Strength Hypo (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.