Ruchi Soya FPO: The FPO of Ruchi Soya, an edible oil company owned by Yoga Guru Baba Ramdev’s Patanjali Ayurved, is about to open tomorrow.
Ruchi Soya FPO: The follow-on public offer (FPO) of Ruchi Soya, an edible oil company owned by yoga guru Baba Ramdev’s Patanjali Ayurved, is set to open tomorrow. It is FPO i.e. its shares are listed in the market. The special thing is that the price band fixed for the FPO of Ruchi Soya is about 27 percent discount from the current share price. Before the arrival of the FPO, there is a huge decline in its shares and it has lost about 17 percent in a week.
The price band for Ruchi Soya’s FPO has been fixed at Rs 615-650 per share and it is currently at Rs 890.05. On the BSE, it has reached a high of Rs 1,377.00 in the last 52 weeks, that is, the upper price of the FPO is at a 53 percent discount from this high. Market experts have given a subscribe rating for investing money in this issue.
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Experts opinion about investing
According to Amarjeet Maurya, Assistant Vice President (Mid Caps) at brokerage firm Angel One, the company has strong support from Patanjali Group. Its distribution network is also strong and very spread. Apart from this, strategically speaking, the company has managed the commodity prices and volatility in the foreign exchange market in a better way. On the other hand, in terms of valuations, in terms of upper price of the price band, its FPO is at 26.6x TTM P/E, which is much lower than Adani Wilmar. Adani Wilmar is on a TTM PE of 57.8x. With the company’s strong brand, large distribution network, better return on equity in FY21, Maurya believes valuations to be at a reasonable level. In such a situation, Maurya has given a subscribe rating to the issue.
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Ruchi Soya FPO Details
- This FPO will open on March 24 and will be able to subscribe till March 28.
- The price band for the issue has been fixed at Rs 616-650 per share.
- The lot size is of 21 shares i.e. according to the upper price of the price band, investors will have to invest at least Rs 13,650.
- The face value of the shares is Rs 2.
- 50 per cent of FPOs have been reserved for Qualified Institutional Buyers (QIBs), 35 per cent for retail investors and 15 per cent for NIIs (Non-Institutional Investors).
- Allotment of shares can be done on 31 March 2022 and listing on 6 April 2022.
- The money raised through the FPO will be used for debt repayment, working capital funding and for general corporate purposes.
Patanjali had acquired three years ago
Ruchi Soya started its business in 1986. About three years ago, it was bought by Patanjali in the year 2019 for Rs 4350 crore through insolvency process. Promoters currently hold 99 per cent stake in the company and need to reduce at least 9 per cent stake through this round of FPO. As per SEBIK norms, the company has to raise the promoters’ stake to a maximum of 75 per cent in three years. Ruchi processes soya oilseeds. Refines crude edible oils and manufactures soy products. Apart from this, it does business of other value added products. Its business is under the brand names of Mahakosh, Sunrich, Ruchi Gold and Nutrila.
(The stock recommendations given in the story are those of the respective research analyst and brokerage firm. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)
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