roshi soybean slips 10%; The stock has fallen 14% in four consecutive sessions

Shares of Ruchi Soya Industries fell 10 per cent to Rs 783.45 on the Bahrain Stock Exchange in trading on Monday ahead of the closing of the follow-up public offering (FPO) today.

The shares of the edible oil company backed by Patanjali were trading lower for the fourth day in a row, down 14 percent during the period. It corrected 31 per cent from a high of 1,139.95 rupees touched on March 15, 2022. At 11:07 am, Ruchi Soya was trading down 6 per cent at Rs 815, compared to a 0.71 per cent drop in S&P BSE Sensex.

So far, the issue has been subscribed 1.35 times with the FPO receiving bids for 66 million shares for a volume of 48.9 million shares. The Qualified Institutional Buyer (QIB) portion was oversubscribed at 0.87 percent, while the High Net Worth Individual (HNI) portion was oversubscribed at 3.92 percent, the retail portion at 52 percent and the employee portion at 5.53 times, according to data NSE.

Roshi Soya said that a meeting of the company’s board of directors is scheduled for March 29, 2022, for the purposes of determining the issue price and the issue price of the lead investor.

The FPO consists of a new issue of equity shares for a total amount of Rs 4,300 crore. The price range of the offer has been set at Rs 615-650 per share.

Prior to the FPO, the company raised Rs 1,290 crore from major investors on March 23. The company said it has allotted more than 19.8 million shares of stock to 46 major investors. Of the total allocation of 19.8 million shares of stock to major investors, 4.19 million shares (21.10 percent of the total allocation to core investors) were allocated to four domestic mutual funds through a total of 24 schemes.

“The allotment price to the underlying investor was Rs 650 per share, which may be subject to change when the issue price is set,” the company said.

The objectives of the new issue are to repay/prepay Rs 2,664 crore of the loans, fund the additional working capital requirement of Rs 593 crore and the remaining amount will be used for general general purposes.

As per SEBI directives, the minimum public shareholding requirement for a listed company should be 25 percent, thus, Ruchi Soya has announced an FPO, whereby the company’s promoters seek to reduce their shareholding to comply with SEBI directives. At present, the promoters group i.e. Patanjali owns 98.9 per cent while the general shareholders own 1.1 per cent. After the FPO, the Patanjali’s contribution will decrease to 81 per cent while the public contribution will rise to 19 per cent.

Ruchi Soya has a recognized brand, extensive distribution network and experienced management team. Going forward, the company will continue to grow its relationship with Patanjali, focus on increasing higher margin products, and improving operating efficiency. Furthermore, expanding the distribution network and managing the supply chain will be critical, the analyst at Religare Broking said in an FPO note.

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