Ruchi Soya has fixed a price band of Rs 615-650 per share for its FPO. Its floor price is Rs 615 while the cap price is Rs 650.
The follow-on public offer (FPO) of Ruchi Soya, an edible oil company owned by yoga guru Baba Ramdev’s Patanjali Ayurved, is about to arrive on March 24. The company has fixed a price band of Rs 615-650 per share for its FPO. Its floor price is Rs 615 while the cap price is Rs 650. The stock is currently trading around Rs 920. In this context, there will be an opportunity to apply for shares at a discount of about 30 percent from the current price in the FPO. At present, experts on this issue say that there are aggressive investors and if there is a plan to invest for a long period, then they can apply. The expert has given neutral rating for the issue.
Valuation better, rating neutral
Swastika Investmart Ltd. Senior Analyst of Aayush Agarwal says that Ruchi Soya has a strong backup from Patanjali Group. At the same time, we are seeing a turnaround in the company where it has managed to turn profitable. It has a strong product portfolio and is one of the fully entered edible oil refining companies in India. Looking at the valuation, the stock is trading with a PE of 32 which is below the industry average. Patanjali Group wants to make this FPO successful so that they can come up with more FPOs. IPOs of other segments are also likely to come. At present the rating for this FPO is neutral. However, aggressive investors can apply for a longer tenure.
Use money to grow business
Ruchi Soya is coming with its own FPO of Rs 4300 crore. The proceeds will be used by the company to further grow the business by repayment of some of its outstanding loans, its growing working capital requirements and other general corporate objectives. Promoters currently hold about 99 per cent stake in this company. The company needs to sell at least 9 percent stake in this round of FPO. The market capitalization of the company will be Rs 22,494-23,530 crore after issue of 18.25%-19.11% equity dilution.
24 March to 28 March
Ruchi Soya’s Rs 4300 crore FPO will open on March 24. At the same time, this issue will be closed on March 28. The company has said that the minimum bid lot will be of 21 shares and thereafter money can be invested in multiples of 21 equity shares. According to the red herring prospectus, the shares will be credited on April 5 and trading will start a day later. Refunds will start from 4th April. Let us tell you that Patanjali Group had acquired Ruchi Soya in the year 2019. Patanjali had acquired this for Rs 4350 crore under the bankruptcy process.
(Disclaimer: Stock Rating & Investment advice is given by experts. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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