Ruchi Soya tanks 19% as board okays FPO allotment; down 28% in one week

Shares of Ruchi Soya Industries continued to witness selling pressure, and fell as much as 19 per cent to Rs 706 on the BSE in Wednesday’s intra-day trade amid heavy volumes ahead of the listing of shares allotted via follow-on-public offering (FPO). The stock of edible oil company has slipped 28 per cent in the past one week, as compared to a 2.8 per cent rise in the S&P BSE Sensex.

At 11:06 am; Ruchi Soya traded 10 per cent lower at Rs 791, as compared to 0.95 per cent decline in the S&P BSE Sensex. The trading volume at the counter jumped over five-fold with a combined 8.34 million equity shares representing 2.8 per cent of total equity of the company changing hands on the NSE and BSE.

Ruchi Soya on Tuesday after market hours said that the FPO issue committee at its meeting held on April 5, 2022 approved the allotment of 66.15 equity shares of face value of Rs 2 each, for an amount aggregating to Rs 4,300 crore, pursuant to the FPO issue. The company 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 announced a FPO, as the promoters of the company seeked to reduce their shareholding to comply with the regulator'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.