The follow-on public offer (FPO) of Patanjali Ayurve-backed Ruchi Soya Industries had received bids for 1.8 crore equity shares against an offer size of 4.89 crore shares, a 37 percent subscription on March 25, the second day of bidding.
Retail investors have put in bids for 39 percent shares of their reserved portion, while the allotted quota of employees was subscribed 3.68 times.
Qualified institutional buyers and non-institutional investors also started submitting their bids, as the portions set aside for them were subscribed 41 percent and 26 percent respectively.
Yoga guru Ramdev-backed FMCG company is looking to garner Rs 4,300 crore through the FPO, of which Rs 1,290 crore has been raised through the anchor book.
The price band for the offer is Rs 615-650 a share, significantly lower from its current market price of Rs 873. The public issue closes March 28.
"Ruchi Soya FPO looks good for long-term perspective. In past years, the stock has shown very high volatility and the valuations are bit weak also. However, the new management is settling down and the results in the coming year could be the key driver of the stock," said Ravi Singh-Vice President and Head of Research at ShareIndia.
In terms of valuations, Amarjeet S Maurya of Angel Broking said the post-issue FPO TTM P/E (trailing twelve months, price to earnings) works out to 26.6x (at the upper end of the issue price band), which is low compared to rival Adani Wilmar (TTM PE -57.8x).
Further, Ruchi Soya has strong brand recall, wide distribution, healthy ROE (FY21). Considering all the positive factors, Maurya said the valuation is reasonable. "Thus, we recommend a subscribe rating on the issue."
Incorporated in 1986, Ruchi Soya Industries is one of the leading FMCG brands in the Indian edible oil sector. It is the largest manufacturer of soya foods with a presence across the entire value chain in upstream and downstream businesses with secured palm plantations.
The company, which was acquired by the Patanjali group in 2019, operates in different verticals such as edible oil and byproducts, oleochemicals, textured soya protein (TSP), honey and atta, oil palm plantation, biscuits, cookies, and rusks, noodles and breakfast cereals, nutraceuticals and wellness, and renewable energy wind power.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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