Ruchi Soya FPO: Patanjali Ayurved-backed Ruchi Soya The Industries Follow-on Public Offer (FPO) has received bids for 152 crore equity shares against an offer size of 4.89 crore shares against 31 per cent subscription till the afternoon of March 25, the second day of bidding. The yoga guru Ramdev-backed FMCG company is looking to raise Rs 4,300 crore through FPOs, of which Rs 1,290 crore has been raised through anchor books.
Ruchi Soya FPO: Subscription Status
Retail investors have bid for 35 per cent of their reserves, while the allotted quota of employees has been subscribed 3.15 times. Qualified institutional buyers and non-institutional investors also started submitting their bids, as the portion set aside for them was subscribed by 41 per cent and 9 per cent, respectively.
Ruchi Soya FPO: Price Close
Its follow-on public offer (FPO) will take place this week on Thursday, March 24, 2022 to raise up to Rs 4,300 crore, and will end 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 “Subscribe” rating to Ruchi Soya FPO as the company is one of the major players in Oil Palm Plantation with upstream and downstream integration and enjoys strong brand recognition in the Indian market. Also, it is available at reasonable valuation. reasonable discount in comparison to its peers and at its current market value,” Marwari Financial Services said in a note.
In August last year, the company had received capital markets regulator SEBI’s nod to launch an FPO. It had filed a draft red herring prospectus (DRHP) in June 2021. The company is going through a public issue in a listed entity to meet SEBI’s minimum 25 per cent public shareholding criterion. In 2019, Patanjali acquired Ruchi Soya, which is listed on stock exchanges, through an insolvency process for Rs 4,350 crore.
“If we look at the valuations, the stock is trading with a PE of around 32 which is lower than the industry average. Patanjali Group wants to make this FPO a success so that they can come out successfully with more FPOs while their other segments are likely to come out with IPOs. We have a neutral rating for this FPO, though aggressive investors can apply for a longer period.”
Ruchi Soya had said that it would use the proceeds of the entire issue for furtherance of the company’s business by repayment of certain outstanding loans, its increasing working capital requirements and meeting other general corporate objectives.
In terms of valuation, the post-issue FPO TTM P/E works out to 26.6x (at the upper end of the issue price band), which is lower than that of Adani Wilmar (TTM PE-57.8x). In addition, RSIL has strong brand recall, wide distribution, healthy ROE (FY21). Taking into account all the positive factors, we believe this assessment is at an appropriate level. Thus, we recommend a subscription rating on this issue, Angle One said in its IPO note.
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