Ruchi Soya gains 8% after listing of FPO shares; stock rises 17% in 2 days

Around 66.15 million equity shares, allotted in follow-on-public offering, started trading on the exchanges from today

Shares of Ruchi Soya Industries jumped 8 per cent to Rs 883 on the BSE in Friday's intra-day trade, extending its Thursday's 8.5 per cent gain' after 66.15 million equity shares, which were allotted in follow-on-public offering (FPO), started trading on the exchanges from today.

"6,61,53,846 equity shares of Rs 2 each fully paid up of Ruchi Soya Industries are listed and admitted for trading on the Exchange with effect from Friday, April 08, 2022," BSE said in notice dated April 7, 2022.

At 09:24 am, Ruchi Soya traded 2 per cent higher at Rs 837.65, as compared to 0.16 per cent rise in the S&P BSE Sensex. The counter saw huge trading volumes with a combined around 8 million shares having changed hands in early minutes of trade on the NSE and BSE.

However, in the past one week, the stock of the edible oil company has underperformed the market by falling 12 per cent, as against a per cent rise in the benchmark index.

On April 5, 2022, Ruchi Soya had approved the allotment of 66.15 million equity shares for an amount aggregating to Rs 4,300 crore, pursuant to the FPO issue. The company had fixed issue price at Rs 650 per share. Pursuant to the allotment of equity shares in the issue, the paid-up equity share capital of the company stands increased from Rs 59.16 crore to Rs 72.40 crore, the company said.

Objectives for the fresh issue are repayment/prepayment of Rs 2,664 crore of borrowings, funding of incremental working capital requirements of Rs 593 crore and remaining amount will be used for general corporate purposes.

As per the SEBI guidance, the minimum requirement for a public shareholding in a listed company should be 25 per cent, Thus, Ruchi Soya has announced a FPO, as the promoters of the company seek to reduce their shareholding to comply with SEBI's guidance.

The Baba Ramdev-led Patanjali Ayurved owns 98.9 per cent in Ruchi Soya, while only 1.1 per cent is with the public. Following the FPO, Patanjali's shareholding is expected to reduce to 81 per cent, while public shareholding will rise to 19 per cent. The move would have helped with better price discovery.

Ruchi Soya has a well-recognized brand name, extensive distribution network and experienced management team. Going ahead, the company would continue to grow its relationship with Patanjali, focus on increasing high-margin products, and improve operating efficiency. Further, expanding the distribution network and managing the supply chain would be crucial, analyst at Religare Broking said in FPO note.