Patanjali-backed Ruchi Soya's follow-on public offer (FPO) is subscribed by 12% on the first day of the issue with retail investors bidding the most. Demand from qualified institutional and non-institutional investors was lackluster.
As per NSE data, on March 24, cumulatively Ruchi Soya's FPO received a bid for 56,33,880 equity shares against the issue size of 4,89,46,260 equity shares - subscribing by 12%.
The portion reserved for Retail Individual Investors(RIIs) was subscribed by 21% with bids of 51,09,594 equity shares against offered 2,44,68,045 equity shares. Meanwhile, the portion reserved for Qualified Institutional Buyers(QIBs) got subscribed by 1% and that of Non-Institutional Investors (NII) by 3%. The issue also includes a reservation of up to 10,000 Equity Shares for eligible employees who subscribed by 1.76 times against the reserved portion on Day 1.
Ruchi Soya's FPO opened on Thursday, March 24, and will continue till Monday, March 28, 2022. The issue has a fixed price band at ₹615 to ₹650 per share. The issue comprises fresh issuance of Equity Shares for an amount aggregating to ₹4,300 crore.
On BSE, Ruchi Soya shares witnessed volatility yesterday. The shares finished at ₹872.75 apiece down by ₹24.70 or 2.75%. The shares were between intraday high and low of ₹897.45 apiece to ₹851 apiece.
Under the issue, 50% of the Offer size is available for allocation to Qualified Institutional Buyers, not less than 15% of the Offer is for Non-Institutional Bidders and about 35% of the Offer is reserved for allocation to Retail Individual Bidders.
Marwadi Financial Services in its note for Ruchi Soya FPO highlighted that considering the FY21 EPS of Rs.18.81 on a post-issue basis, the company is going to list at a P/E of 34.56x with a market cap of Rs.235,297 mn whereas its peers namely Agro Tech and Marico are trading at PE of 96.26x and 54.62x.
"We assign a “Subscribe" rating to this 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," the financial services provider said in its note.
Through the FPO, promoters of the company aim to reduce their shareholding to comply with Sebi's guidance. Currently, under the Sebi direction, the minimum requirement for a public shareholding in a listed company should be 25%. That said, the FPO will support Swami Ramdev's Patanjali to adhere to the minimum shareholding rules. Currently, Patanjali owns 98.9% of Ruchi Soya while public shareholders own 1.1%. Post the FPO, Patanjali's shareholding in the edible oil manufacturer will reduce to 81% while public shareholding will rise to 19%.
Ruchi Soya is a diversified FMCG and FMHG focused company, with strategically located manufacturing facilities and well-recognized brands having a pan India presence. It is recognized amongst the largest branded oil packaged food company.
