Ruchi Soya FPO
Ruchi Soya’s follow-on public offering (FPO), backed by yoga guru Baba Ramdev, will run from now. The Rs 4,300 crore FPO is available at a 40% discount to the company’s current market price of Rs 913 at the upper end of the pricing band of Rs 650 per share. The company intends to raise Rs 4,300 crore through its FPO. The net proceeds of the FPO will be used to repay debts, meet working capital requirements, and other general company objectives.
We assign a “Subscribe” button”. Ruchi Soya FPO received a rating since the company is one of the leading players in Oil Palm Plantation with upstream and downstream integration and has significant brand awareness in the Indian market. Furthermore, it is accessible at a decent valuation in comparison to its rivals, as well as a reasonable discount to its current market price, “Marwadi Financial Services stated.
Aditya Birla Sun Life Trustee, AG Dynamics Funds, Alchemy India, ASK MF, Authum Investment, Belgrave Investment Fund, BNP Paribas Arbitrage, Cohesion MK Best Ideas, HDFC Life Insurance, Kotak MF, NPS Trust, Quant MF, SBI Life Insurance, Société Générale, UPS Group TRUST, UTI MF, Colorado Venture Partners, and Winro Commercial were among the investors.
The goal of this FPO is to diminish the promoter’s ownership of the company. According to SEBI regulations, promoters’ participation in Rui Soya is limited to 75%. Currently, the promoter owns more than 98 per cent of the corporation.
Ruchi Soya is one of the leading branded oil-packaged food firms, with a diverse portfolio of cooking oil brands, including palm, soybean, mustard, sunflower, cottonseed, and others. Its flagship brand, ‘Ruchi Gold,’ commands a dominant market position.
Under the brand name ‘Nutrela,’ it is also one of India’s leading soy food manufacturers. It has increased its packaged food range by acquiring the ‘Patanjali’ product portfolio, including biscuits, cookies, biscuits, noodles, and breakfast cereals.
Should you invest in Ruchi Soya
According to the experts, the large discount is also due to Patanjali’s desire for the issue to succeed in light of the unpredictable market conditions. There will also be more FPO next year because Patanjali will still own more than 75% of the company after this round of share sales. As a result, investor appetite must remain high.
Ruchi Soya stated that the total issuance proceeds would be used to enhance the company’s business by repaying some existing debts, fulfilling incremental working capital requirements, and other general corporate reasons.
“Patanjali Group wants to make sure this FPO is effective so that it can generate additional FPOs,” said Aayush Agrawal, Senior Analyst at Swastika Investment.
“In terms of values, post-issue FPO TTM P/E works out at 26.6x,” said Amarjeet Maurya, AVP – Mid Caps, Angel One Ltd.
“In terms of pricing, the post-issue FPO TTM P/E works out to 26.6x (at the upper end of the issue price band), which is cheap compared to its rivals Adani Wilmar,” said Amarjeet Maurya, AVP – Mid Caps, Angel One Ltd. (TTM PE -57.8x). ISIL also has a great brand recall, widespread distribution, and a healthy ROE (FY21). Given all of the favourable factors, we believe this valuation is reasonable. As a result, we suggest that the issue be subscribed to.”
“Ruchi Soya FPO seems strong for the long run,” said Ravi Singh, Vice President and Head of Research at ShareIndia. The stock has demonstrated extreme volatility in recent years, and the valuations are also low. However, the management change is settling in, and the outcomes in the coming year could be the stock’s primary mover.”
Even before Ruchi Soya launched its FPO, the company had raised approximately Rs 1,290 crore from anchor investors. According to the company’s instructions to the BSE, it has assigned 1.98 crore equity shares to 46 anchor investors in the higher price band for Rs 650 per share. Four domestic mutual funds have been allocated 41.91 lakh shares. These mutual funds have made investments through their 24 separate schemes.
Aditya Birla Sun Life Trustee, AG Dynamic Funds, Alchemy India, ASK MF, Atham Investment, Belgrave Investment Fund, BNP Paribas Arbitrage, Cohesion MK Best case, KFC MFC, EFCA SBI Life Insurance, Society General, UPS Group Trust, UTI Mutual Funds, Vornado Venture Partners, Winro Commercial, and others participated in the anchor round.
Ruchi Soya FPO’s price band has been set at Rs 615-650 per share. Bidding will be open until March 28. FPO is up to bids on 21 shares.
The FPO will be open from March 24 through March 28. The shares will be distributed on March 31. Those who do not like the stock will be refunded until April 4. The listing expires on April 6, 2022
QIBs, or Qualified Institutional Buyers, receive 50% of all FPOs. At the same time, 35% is set aside for regular investors, and Non-institutional investors are entitled to 15% of the NII.
Patanjali Ayurveda paid Rs 4350 crore for Ruchi Soya in bankruptcy proceedings in 2019. Ruchi Soya was a publicly traded corporation on the stock exchange during the bankruptcy proceedings. Currently, the promoters own 99 per cent of the corporation. The corporation intends to sell around 9% of its stock in this round of FPOs to public shareholders.
An FIR was filed even as the Securities and Exchange Board of India (Sebi) asked Ruchi Soya in a letter for clarification on a post that spread on social media.
The message suggested that there was an “excellent investment opportunity” in “Patanjali group company Ruchi Soya Industries.” It also stated a “30% discount from the market price.”
“We realize that an SMS/message is circulating in social media speculating about investment opportunities in our Company’s Issue and equity shares of our Company being available at a discount to market pricing (“Message”). “We wish to draw the attention of investors to the fact that this Message has not been issued by our Company or any of its Directors, Promoters, Promoter Group, or Group Companies,” the company said in a BSE filing.
Baba Ramdev announced ahead of the Ruchi Soya FPO that the company would be debt-free by April. Ruchi Soya is in debt to the tune of Rs 3,300 crore.
Edited by Prakriti Arora