Ruchi Soy FPO: Edible oil giant Ruchi Soya Industries has launched its Rs 4,300 crore follow-on public offering (FPO), which runs from March 24 to 28, priced at Rs 615-650 per share. “The FPO consists of shares with a nominal value of Rs 2, each added up to Rs 4,300 crore. The issuance also includes a reservation of up to 10,000 shares for subscription by eligible employees. When such placement is completed, the follow-up size will be reduced,” Ruchi Soya said in a statement. Ruchi Soya is primarily engaged in oilseed processing, refining crude edible oil for use as cooking oil, manufacturing soybean products and value-added products. The company has an integrated value chain in palm and soy segments with a farm-to-table business model and has brands such as Mahakosh, Sunrich, Ruchi Gold and Nutrela.
Ruchi Soya FPO: Price Band
The top end of the price range – Rs 650 per share – represents a 35 percent discount from Thursday’s closing price. The company said the minimum offer will be for 21 shares and in its multiples thereafter. The red herring prospectus states that shares will be credited on April 5 and trading will begin a day later. Refunds will start on April 4.
Ruchi Soya, which received approval for the FPO in August 2021, was acquired by Patanjali in 2019 for its Nutrela products for Rs 4,350 crore through the insolvency process.
Ruchi Soya FPO: What is the rationale?
Proceeds from the FPO will be used to repay certain outstanding loans, meet increasing working capital requirements and other general corporate purposes.
The dilution from the FPO would help Baba Ramdev-led Patanjali Ayurveda, which owns Ruchi Soya, to adhere to minimum shareholder standards. In August 2021, the company received approval from Sebi, the capital markets regulator, to launch the FPO. It had submitted the draft red herring prospectus (DRHP) in June 2021.
The initiators currently have an interest of almost 99 percent in the large edible oil. The company must dilute a minimum 9 percent stake in this round of the FPO.
Under the rules of the Securities and Exchange Board of India (SEBI), the company must reduce the promoters’ stake in order to reach the minimum public shareholding of 25 percent. It has about three years to reduce the promoters’ stake to 75 percent.
Ruchi Soy Stocks Tank 17%
Ruchi Soya shares opened 17.27 percent lower at Rs 831 against the previous close of Rs 1004.45 on BSE. At 9:41 am, the stock fell 11.53 percent to Rs 888.60 on BSE. However, the stock is up 4.13 percent since the beginning of this year and is up 33.59 percent in one month.
Ruchi Soya pioneered soy products in India in the 1980s under the Nutrela brand. The acquisition of the Patanjali group enables Ruchi Soya to take advantage of the ayurveda company’s pan-Indian distribution network, FMCG know-how and group synergies.
Ruchi Soya shares relisted on January 27, 2020 at Rs 16.10 each and rose around the 52-week high of Rs 1,378 on June 9, 2021. The stock now trades at Rs 1,004.35 on the BSE, down 6.22 percent from its previous close.
Should you invest?
Unlike an IPO, where the stock price is based on the company’s performance, the stock price for an FPO is market dependent because the stock is already traded in the market.
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