Ruchi Soya FPO Subscription Status: Issue booked 1.35 times on final day; employees category lead subscription on last day

The follow-on public offer (FPO) of Ruchi Soya Industries, which opened on March 24, will close today, March 28. Ruchi Soya that aims to raise Rs 4,300 crore through the FPO saw investors rushing to subscribe to the issue on Monday as the follow-on public offer was subscribed 1.35 times on the final day. The FPO of Baba Ramdev led Patanjali's subsidiary was subscribed by 37 per cent on the second of its issue.  

The FPO saw maximum interest from employees' category, which subscribed to the issue 5.55 times, followed by non-Institutional investors (NII) who booked the offer 3.92 times. Qualified Institutional buyers (QIBS) and Retail investors subscribed the issue 0.87 and 0.53 times respectively around 11.30 am on Monday. 

The FPO comprises equity shares of face value of Rs 2 each aggregating to Rs 4300 crore. The issue also includes a reservation of up to 10,000 equity shares for subscription by eligible employees and promoters are offloading equity shares in the range of Rs 615 – 650 each.  

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On Wednesday, Ruchi Soya had raised Rs 1290 crore from anchor investors, who were allotted 19,843,153 equity shares at the upper price band of Rs 650 per share.  

Societe Generale, BNP Paribas, The Sultanate of Oman - Ministry of Defence Pension Fund, Yas Takaful PJSC (an Abu Dhabi based insurance company), MK Cohesion, UPS Group and Alchemy are among the foreign investors that received allocation under the anchor investor portion of the FPO.  

In addition, equity shares have been allocated to domestic investors, such as ASK Investments, Volrado Ventures, Kotak Mutual Fund, SBI Pension Fund, UTI Mutual Fund, Aditya Birla Sun Life Mutual Fund, Quant Mutual Fund, Winro Commercial, HDFC Life Insurance, SBI Life Insurance and Authum Investments under the anchor investor portion of the FPO.  

SBI Capital Markets Limited, Axis Capital Limited and ICICI Securities Limited are the book running lead manager to the Issue (“BRLM”).  

What should investors do?  

Senior Analyst, Swastika Investmart Ltd, is of the view that Ruchi Soya has a strong backup from the Patanjali group and witnessing a turnaround in the company where it managed to turn profitable.  

"Patanjali group wants to make this FPO successful so that they can come out with more FPOs successfully. They are also likely to come out with IPOs of other segments. We have a neutral rating for this FPO, however, aggressive investors can apply for long term," he added.  

The objective of this FPO is repayment of the company’s borrowings and funding working capital requirements which is not good for the investors, says Likhita Chepa, Senior Research Analyst at CapitalVia Global Research.  

"The company is not in the expansionary mode, and is still trying to repay its existing debt. Investors can avoid this FPO," she said.

Ruchi Soya is amongst the largest branded oil packaged food companies. The Company is recognised as the largest branded oil packaged food company with a strong portfolio of brands in various types of cooking oils under categories such as palm, soybean, mustard, sunflower, cottonseed etc.  

The company has a total of 23 processing plants (of which 17 are currently operational) across India. Also, they have developed an extensive distribution pan India network of over 97 sale depots, 4,763 distributors who in turn reach out directly to 4,57,788 retail outlets.

Company details

Ruchi Soya is recognized amongst the largest branded oil packaged food company. Its ‘Ruchi Gold’ brand has a market leadership position, on account of being India’s highest selling palm oil  brand and also the pioneers and largest manufacturers of soya foods in India under the brand name of “Nutrela’, which Ruchi Soya launched in 1980s. 

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.