Ruchi Soya extends rally in a weak market; zooms 72% against FPO price

The stock was up 7% to Rs 1,115, and has zoomed 72% against FPO price of Rs 650 on the BSE

Shares of Ruchi Soya Industries continued at their northward movement, surging 7 per cent to Rs 1,115 on the BSE in Wednesday's trade, in otherwise a weak market on the back of heavy volumes. The stock of the edible oil company was trading higher for the sixth straight day, having surged 19 per cent during the period.

At 01:50 PM, Ruchi Soya was up 6.7 per cent at Rs 1,110, as compared to 0.71 per cent decline in the S&P BSE Sensex. The stock had hit a 52-week high of Rs 1,377 on June 9, 2021. Trading volumes on the counter nearly doubled with a combined 10.98 million equity shares having changed hands on the NSE and BSE till the time of writing of this report.

With the recent rally, shares of the Patanjali Ayurved-promoted firm have zoomed 72 per cent as against their follow-on public offer (FPO) price of Rs 650. The company had raised Rs 4,300-crore to pare debt. The FPO was done to dilute the promoter holding in the company in order to comply with the 25 per cent minimum public shareholding norms. Following the FPO, the promoter shareholding in the company has reduced from 98.9 per cent to below 80.82 per cent.

The board of directors of Ruchi Soya Industries also changed the company's name to Patanjali Foods. "At its board meeting held on April 10, the directors also accorded their in-principle approval for evaluating the most efficient mode of enhancing synergies with Patanjali Ayurved Ltd's food portfolio in any manner on an arm’s-length basis," the company had said.

Ruchi Soya is recognized amongst the largest branded oil packaged food company. Its 'Ruchi Gold' brand has a market leadership position, on account of being India's highest selling palm oil brand and also the pioneers and largest manufacturers of soya foods in India under the brand name of “Nutrela’.

The Company is recognised amongst the largest branded oil packaged food company with a strong portfolio of brands in various types of cooking oils under categories such as palm, soybean, mustard, sunflower, cottonseed etc. with robust brands portfolio of “Ruchi Gold”, “Mahakosh”, “Sunrich”, Ruchi Star and Ruchi Sunlight.

The Company has expanded its packaged food portfolio by acquiring the ‘Patanjali’ product portfolio of biscuits, cookies, rusks, noodles, and breakfast cereals and is a part of the Patanjali group, one of India’s leading FMCG and health and wellness company.

"The edible oil industry in India is fragmented wherein 13 per cent of oil is sold as loose/unbranded and the consumers are shifting to branded oils, which presents a large market for its products. They believe that this enables them to manage costs more effectively than several of its competitors and also helps in scalability of its edible oil business. It also gives them the flexibility to alter mix of products in line with any changes in the demand for products or in the availability or the price of its key raw materials at any given time. Over the years, Company has developed relationships with some of the large oil suppliers in the world," HDFC Securities had said in an IPO note.

Their inland oilseed crushing plants generally process oilseeds harvested in India and are located in the key soybean and mustard seed producing states of India. Their refining plants primarily use crude edible oil as a raw material, and this is typically imported by sea. Their pan- India operations also mean that they have proximity to regional markets across India giving them the capability to service customers efficiently. The location of processing plants enables them to minimise inward and outward inland transportation costs, the brokerage firm had said.