Ruchi Soya Industries Ltd - Employee
₹615-650
Saddled with ₹12,000 debt and heavy losses, Ruchi Soya was grappling with bankruptcy proceedings in 2017. Following this, a prolonged battle ensued between the bidders with Ramdev-owned Patanjali Ayurved emerging as a winner in 2019.
The new owners have quickly scripted a turnaround after taking over the diversified fast-moving consumer goods (FMCG) company. The company has turned profitable and its debt has been sizably reduced.
Subsequently, shares of the company, which were again listed on the exchanges in 2020, have seen strong traction. Now, Ruchi Soya is all set to launch a follow-on public offer (FPO) to further reduce debt and reportedly dilute the promoter’s stake to meet the market regulator’s norms.
All about the FPO
Ruchi Soya is a FMCG company with a strong presence in branded refined edible oil and soya food segments. The company owns and operates Ruchi Gold – the largest selling palm oil brand in India. It also sells refined oil under brand names such as Nutrela, Mahakosh, Sunrich and Ruchi Star.
It is also one of the largest manufacturers of soya foods in India and owns the popular brand Nutrela. In fact, in the palm and soya segments, the company has a presence across the value chain ‒ sourcing, supplying, manufacturing, branding and distribution. Ruchi Soya has also expanded its footprints overseas and exports value-added soya products to more than 38 countries.
In addition to edible oil and soya, it has a presence in the biscuit, cookies, rusks, noodles and breakfast cereals segments and sells them under Patanjali brand. The company also sells nutraceutical and wellness products under the joint branding of Patanjali and Nutrela.
Besides these segments, the company also has other business verticals such as oleochemicals, edible soya flour, honey and atta (flour); oil palm plantation and wind power.
Financials
Revenue: 13%; Net Profit: 347% (FY19-21 CAGR)
Strengths
- A leader in the branded soya chunks space with a share of 40%.
- FPO proceeds will help to reduce debt and thereby improve the balance sheet.
- Operates in segments with higher costs and longer gestation periods, which creates entry barriers.
- Has one of the largest refining capabilities (11,000 tonnes per day).
- Product portfolios cater to a wide range of tastes, preferences, price points and consumer segments.
Risks
- Rising input costs due to the Russia-Ukraine conflict may hurt profitability.
- Significantly (around 84% in FY21) depends on the sale of edible oil products for revenue.
- Requires sizable amount of working capital for operations and growth.
- Operates in highly competitive FMCG space.
Good to know
India’s branded edible oil market is expected to grow at a CAGR of 6.6% between FY20 and FY25. Being a major player in the market, Ruchi Soya could benefit from consumers’ growing preference for branded oil products.
IPO analysis
You can apply on Upstox’s website and app, once the FPO opens for subscription.
Ruchi Soya’s FPO is open for subscription between 24 March 2022 and 28 March 2022.
The lot size for Ruchi Soya’s FPO is 21 shares and the minimum investment required is ₹12,915.
The price band for Ruchi Soya’s FPO is ₹615-₹650 per share.
The size of Ruchi Soya’s FPO is ₹4,300 crore.
You can place up to three bids for an application.
No, the bids have to be placed at one go. If you want to add an additional bid, then you would have to delete your application and re-apply.
The date for crediting of shares to the demat account is 5 April 2022.
NSE and BSE
The shares will be available for trading from 6 April 2022.