Ruchi Soya FPO: Patanjali Ayurved-backed Ruchi Soya Industries follow-on public offer (FPO) has received bids for 1.52 crore equity shares against an offer size of 4.89 crore shares, a 31 per cent subscription by the afternoon of March 25, the second day of bidding. Yoga guru Ramdev-backed FMCG company is looking to garner Rs 4,300 crore through the FPO, of which Rs 1,290 crore has been raised through the anchor book.
Ruchi Soya FPO: Subscription Status
Retail investors have put in bids for 35 per cent shares of their reserved portion, while the allotted quota of employees was subscribed 3.15 times. Qualified institutional buyers and non-institutional investors also started submitting their bids, as the portions set aside for them were subscribed 41 per cent and 9 per cent respectively.
Ruchi Soya FPO: Price Band
Its follow-on public offer (FPO) this week on Thursday, March 24, 2022 to raise up to Rs 4,300 crore, and conclude on March 28. The price band has been fixed at Rs 615 to Rs 650 per share.
Ruchi Soya FPO: Should You Subscribe?
“We assign a “Subscribe” rating to the Ruchi Soya FPO as the company is one of the key players in Oil Palm Plantation with upstream & downstream integration and enjoys strong brand recognition in the Indian market. Also, it is available at a reasonable valuation as compared to its peers and a reasonable discount to its current market price,” said Marwadi Financial Services in a note.
In August last year, the company had received capital markets regulator Sebi’s go-ahead to launch the FPO. It had filed the draft red herring prospectus (DRHP) in June 2021. The company is coming out with the public issue to meet Sebi’s norm of minimum public shareholding of 25 per cent in a listed entity. In 2019, Patanjali acquired Ruchi Soya, which is listed on the stock exchanges, through an insolvency process for Rs 4,350 crore.
“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 the long term,” said Aayush Agrawal, research analyst – merchant banking, Swastika Investmart.
Ruchi Soya had said it will 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 terms of valuations, the post-issue FPO TTM P/E works out to 26.6x (at the upper end of the issue price band), which is low compared to its peers Adani Wilmar (TTM PE -57.8x). Further, RSIL has strong brand recall, wide distribution, healthy ROE (FY21). Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a subscribe rating on the issue, said Angle One in its IPO note.
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