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Business News/ Markets / Stock Markets/  Ruchi Soya FPO price at discount. Should you subscribe?

Ruchi Soya FPO price at discount. Should you subscribe?

Ruchi Soya FPO concludes on March 28 and the price band has been fixed at ₹615 to ₹650 per share

Photo: iStockPremium
Photo: iStock

Edible oil firm Ruchi Soya, which is owned by Baba Ramdev-led Patanjali Ayurved, hit the capital market with its follow-on public offer (FPO) this week on Thursday, March 24, 2022 to raise up to 4,300 crore, and conclude on March 28. The price band has been fixed at 615 to 650 per share.

"We assign a “Subscribe" rating to the Ruchi Soya FPO as the company is one of the key players in Oil Palm Plantation with upstream & downstream integration and enjoys strong brand recognition in the Indian market. Also, it is available at a reasonable valuation as compared to its peers and a reasonable discount to its current market price," said Marwadi Financial Services.

In August last year, the company had received capital markets regulator Sebi's go-ahead to launch the FPO. It had filed the draft red herring prospectus (DRHP) in June 2021. The company is coming out with the public issue to meet Sebi's norm of minimum public shareholding of 25% in a listed entity. In 2019, Patanjali acquired Ruchi Soya, which is listed on the stock exchanges, through an insolvency process for 4,350 crore.

“If we look at the valuations then the stock is trading with a PE of around 32 which is lower than the industry average. Patanjali group wants to make this FPO successful so that they can come out with more FPOs successfully whereas they are also likely to come out with IPOs of their other segments. We have a neutral rating for this FPO however aggressive investors can apply for the long term," said Aayush Agrawal, Research Analyst - Merchant Banking, Swastika Investmart.

Ruchi Soya had said it will utilise the entire issue proceeds for furthering the company's business by repayment of certain outstanding loans, meeting its incremental working capital requirements and other general corporate purposes.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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Published: 25 Mar 2022, 09:20 AM IST
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