Ruchi Soya tumbles after board sets FPO issue price

Ruchi Soya Industries fell 4.90% to Rs 908.80 after the company's board set the issue price of the recently concluded follow-on public offering (FPO) at Rs 650 per equity share.

The issue price is at 28.48% discount to the ruling market price.

Ruchi Soya's FPO opened for public participation on 24 March 2022 and it closed on 28 March 2022. The FPO consists of fresh issuance of equity shares for an amount aggregating to Rs 4,300 crore. The price band for the offer was fixed at Rs 615-650 per share.

The FPO was subscribed 3.60 times on 28 March 2022. The issue received bids for 17,60,68,935 equity shares against the issue size of 4,89,46,260 equity shares.

However, the Securities and Exchange Board of India (Sebi) directed Ruchi Soya to give the option to investors, who participated in their FPO, to withdraw their bids from 28-30 March.

Sebi's directive came amid the circulation of unsolicited SMSes advertising the FPO issue. The messages, that were allegedly sent to Patanjali Ayurved users, recommended them to invest in the offer. The SMS contained forward-looking statements with regard to Ruchi Soya's share price performance to attract investors to the FPO.

The FPO closed on 28 March, but the withdrawal window was open for two days till 30 March as per the Sebi directive.

According to the media reports, nearly 97 lakh bids were withdrawn from the FPO and the subscription of the offer came down to 3.39 times on 30 March. Still the FPO concluded sucessfully.

Post FPO, Patanjali's shareholding in the edible oil manufacturer will reduce to 81% while public shareholding will rise to 19%.

The company aims to utlise the proceeds from the issue for repayment/prepayment of Rs 2663.8 crore of borrowings, funding of incremental working capital requirements of Rs 593.42 crore and remaining amount will be used for general corporate purposes.

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'. It has launched its nutraceuticals under the joint branding of 'Patanjali and Nutrela'.

Net profit of Ruchi Soya Industries rose 2.92% to Rs 234.07 crore on 40.65% rise in net sales to Rs 6280.46 crore in Q3 December 2021 over Q3 December 2020.

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