Ruchi Soya FPO: Patanjali Group-owned Ruchi Soya Industries on Monday fixed the price band of its follow-on public offer (FPO) at Rs 615-650 per share of the face value of Rs 2 each. The company which is into fast-moving consumer goods (FMCG) and fast-moving health goods (FMHG), will issue equity shares aggregating to Rs 4,300 crore.
The FPO will open on Thursday, March 24, 2022, and will be available for subscription till Monday, March 28, 2022. In a stock exchange filing, Ruchi Soya informed that the upcoming issue includes a reservation of up to 10,000 equity shares for subscription by employees.
In August 2021, Ruchi Soya had received the go-ahead from markets regulator Sebi to launch the FPO. It had filed the draft red herring prospectus (DRHP) in June last year. The company is coming out with its FPO to meet Sebi’s norm of minimum public shareholding of 25 per cent in a listed entity.
According to the DRHP, Ruchi Soya plans to utilise the entire issue proceeds for furthering the company’s business by repayment of certain outstanding loans, meeting its incremental working capital requirements and other general corporate purposes.
In 2019, Patanjali Group had acquired the stock exchange-listed Ruchi Soya through an insolvency process for Rs 4,350 crore.
At the moment, the promoters have a nearly 99 per cent stake. It needs to dilute a minimum 9 per cent stake in this round of the issue.
According to Sebi rules, the company needs to bring down promoters’ stake to achieve the minimum public shareholding of 25 per cent. It has around 3 years to pare promoters’ stake to 75 per cent.
Investors willing to subscribe to Ruchi Soya Industries’ FPO can bid in the lot of 21 equity shares and multiples thereof. At the upper price band, they will have to shell out Rs 13,650 to get a single lot of Ruchi Soya.
Ruchi Soya primarily operates in the business of processing oilseeds, refining crude edible oil for use as cooking oil, manufacturing soya products, and value-added products. It has an integrated value chain in palm and soya segments, having a farm-to-fork business model. It owns brands such as Mahakosh, Sunrich, Ruchi Gold and Nutrela.
Shares of Ruchi Soya ended 9.39 per cent lower at Rs 910.10 per share on the BSE.
Speaking about the Ruchi Soya FPO, Aayush Agrawal, Senior Analyst at Swastika Investmart said, “It has a strong backup from the Patanjali group and we are seeing a turnaround in the company where it managed to turn profitable. It has a strong product portfolio and is one of the largest fully integrated edible oil refining companies in India.”
He noted that “If we look at the valuations then the stock is trading with a PE of around 32 which is lower than the industry average. Patanjali group wants to make this FPO successful so that they can come out with more FPOs successfully whereas they are also likely to come out with IPOs of their other segments. We have a neutral rating for this FPO however aggressive investors can apply for long term.”