Ruchi Soya Industries, which is owned by the Patanjali Group, will launch its much-anticipated follow-on public offer on 24th March 2022. The Ruchi Soya FPO, valued at Rs 4,300 crore, will be up for subscription till 28th March 2022, with a price range of Rs 615-650 per share.
Ruchi Soya is an FMHG and an FMCG business. With a farm-to-fork business strategy, the firm has an integrated value chain in the palm and soya divisions. Sunrich, Mahakosh, Nutrela and Ruchi Gold are among the brands owned by Ruchi Soya. Patanjali Group purchased the stock exchange-listed business for Rs 4,350 crore via an insolvency procedure in 2019.
Ruchi Soya Industries issued its FPO to comply with SEBI’s requirement that a listed business have minimum public ownership of 25%. It gained approval from SEBI to begin the FPO in August of last year. In June of last year, a draft red herring prospectus was filed for the same. To meet the minimum public ownership requirement of 25%, the business must reduce promoters’ stakes, according to SEBI guidelines. It has around three years to reduce the promoters’ share to 75%.
Patanjali, which now owns 98.9% of the firm, will dilute about 19% at the top end and 18% at the lower end of the pricing range. The remaining 6-7 percent will be dissolved before the deadline of 31st December 2022 to fulfill the statutory 25% public float, according to the business.
According to the information presented in the red herring prospectus, the firm intends to use the net proceeds to repay and/or prepay debt, finance additional working capital needs, and for general corporate reasons. Qualified institutional buyers will get half of the issue size, retail investors will receive 35%, and non-institutional bidders will receive 15%.
Investors interested in subscribing to Ruchi Soya FPO may place a bid in a lot of 21 equity shares and then bid in multiples. They would have to pay Rs 13,650 for a single batch of Ruchi Soya Industries at the top of the pricing scale. Both the BSE and the National Stock Exchange will list the shares.
Applicants should also keep in mind that the UPI mandate confirmation deadline is Tuesday, March 29, 2022, at 12:00 p.m. If they do not comply, their application may be rejected. The issue’s book running lead managers are SBI Capital Markets, ICICI Securities and Axis Capital, while the registrar is Link Intime India. The anchor part will open on Wednesday, March 23, 2022, before proceeding into the FPO.
An expert stated that the interminable conflict between Ukraine and Russia has sparked fears of an increase in edible oil costs as well as a supply deficit, although for a limited time. He noted that, although Ruchi Soya’s financials are a little weak and its growing earnings aren’t consistent, investors should subscribe to the impending FPO because of the company’s solid basis and history, as well as the demand for its goods.
“The post-issue market capitalization would be Rs 22,494 – 23,530 crore with an equity dilution of 18.25-19.11 percent,” the expert said. “It has the Patanjali Group’s support, and we’re witnessing a turnaround in the firm, which has managed to become profitable. It is one of India’s biggest fully integrated edible oil refining firms, with a robust product range.”
“If we look at the values, the company is trading with a PE of roughly 32, which is lower than the industry average,” he said. The Patanjali group wants this FPO to be a success so that they may launch other FPOs in the future, and they are also planning IPOs for their other businesses. According to the DRHP, the share allocation with the authorized stock market will take place on Thursday, March 31, 2022, and the shares will begin trading on Wednesday, April 6, 2022.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.