Ruchi Soya owns 19% as board approves FPO allocation; 28% drop in one week
Shares of Ruchi Soya Industries continued to come under selling pressure and fell 19% to Rs 706 on BSE during Wednesday’s intraday trading amid heavy volumes ahead of the listing of the shares allotted via a follow-on public offering (OPF). The edible oils company’s stock has fallen 28% in the past week, compared to a 2.8% rise in the S&P BSE Sensex.
At 11:06 a.m.; Ruchi Soya traded down 10% at Rs 791, against a 0.95% decline in the S&P BSE Sensex. Over-the-counter trading volume increased five-fold with a combined total of 8.34 million shares representing 2.8% of the company’s total capital changing hands on the NSE and BSE.
Ruchi Soya said after market hours on Tuesday that the issuance committee of the FPO, at its meeting on April 5, 2022, approved the allotment of 66.15 shares with a par value of Rs 2 each, for a amount totaling Rs 4,300 crore, as per the FPO. publish. The company has set the issue price at Rs 650 per share.
In accordance with the allotment of shares under the issuance, the paid-up share capital of the company has increased from Rs 59.16 crore to Rs 72.40 crore, the company said.
The objectives of the new issue are – repayment/prepayment of Rs 2,664 crore of borrowings, funding of additional working capital requirements of Rs 593 crore and the remaining amount will be used for general corporate purposes.
According to SEBI guidelines, the minimum requirement for public ownership in a listed company should be 25%. So Ruchi Soya announced an FPO as the company’s promoters sought to reduce their stake to comply with regulator guidelines.
Patanjali Ayurved, led by Baba Ramdev, owns 98.9% of Ruchi Soya, while only 1.1% is publicly owned. Following the FPO, Patanjali’s shareholding is expected to be reduced to 81%, while public shareholding will increase to 19%. This decision would have contributed to better price discovery.
Ruchi Soya has a recognized brand, an extensive distribution network and an experienced management team. Going forward, the company would continue to develop its relationship with Patanjali, focus on increasing high-margin products and improving operational efficiency. In addition, expanding the distribution network and managing the supply chain would be crucial, an analyst at Religare Broking said in an FPO note.