The follow-on public offer of Patanjali Ayurved Group-controlled Ruchi Soya Industries was subscribed 11 percent, with investors putting in bids for 54.79 lakh equity shares against an offer size of 4.89 crore equity shares by noon on March 24, the first day of bidding.
The offer size was reduced from 6.6 crore shares to 4.89 crore as the FMCG company, backed by yoga guru Ramdev, mopped up Rs 1,290 crore from anchor investors a day earlier. The price band for the offer has been fixed at Rs 615-650 a share.
The portion set aside for retail investors was subscribed 20 percent and non-institutional investors portion subscribed 3 percent.
While, Qualified institutional portion subscribed 1 percent.
The company plans to raise Rs 4,300 crore through the offer, the proceeds of which will be used for repaying debt, meeting working capital requirements and general corporate purposes.
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Incorporated in 1986, Ruchi Soya, which was acquired by Patanjali group in 2019, is one of India's largest manufacturers of soya foods branded as Nutrela, which has become a household and generic name.
It is an integrated player in the edible oil business with a presence across the entire value chain and has the largest palm plantation in India.
It is also in the business of wind-power generation, where the power generated is used for sale and for captive use. It has manufacturing facilities at 23 locations with a pan-India distribution network.
KR Choksey said Ruchi Soya's foray into other FMCG and FMHG products, including oleochemicals, biscuits, rusks, wheat flour, honey and nutraceuticals, bodes well for its mid to long-term business growth. The company focused on integrating its operations in order to build a value chain and improve its operational efficiencies.
"At the upper price band of Rs 650 share, the FPO is available at 40 percent discount to the company's current market price of Rs 910 per share. The industry is valued at TTM PE of 31.5x and Ruchi Soya's TTM PE multiple is 33.5x. while the FPO is valued at a multiple of 21x," said the brokerage which recommended subscribing for listing and long-term gains.
Ruchi Soya's revenue has grown at a CAGR of 10.8 percent over FY18-21. The revenue grew by 24.4 percent YoY to reach Rs 16,318.6 crore in FY21. The company's EBIDTA grew at a CAGR of 111.6 percent over FY18-FY21.
"The growth has been supported by synergies from acquisition with Patanjali and various product launches with rising market share gain in existing as well as new products. Its EBIDTA margin is expected to improve further with increasing scale of FMCG and FMHG supported by integrated business operations," KR Choksey said.
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