Ruchi Soya FPO subscribed 8% in first 3 hours of bidding

NEW DELHI: Public bidding for Ruchi Soya Industries' follow-on public offer (FPO) was off to a slow start on Thursday. Institutional buyers were yet to participate and most bidding came from employees and retail investors.

As of 1 pm, the issue was subscribed close to 8 per cent, with total applications coming in for 36,90,183 shares against 4,89,46,260 on offer.

A day earlier, the company raised Rs 1,290 crore from 46 anchor investors. 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.

About 21 per cent of the total anchor book size was allocated to 24 mutual fund schemes including Kotak, SBI, UTI, Aditya Birla Sun Life, Quant among others.

Analysts are largely upbeat about the issue as the company is selling shares at a deep discount to the prevailing prices. Moreover, the company plans to use the fund to pay off debts, which will also strengthen its balance sheet.

At the higher price band, Ruchi Soya is asking for a P/E multiple of 34.8 times based on H1FY22 annualised post issue fully diluted EPS against an industry average of 65 times.

"It appears that the FPO would sail through. The anchor investor that participated in anchor allotment also encourages the Street. More importantly, such types of businesses are attracting more and more investors. You look at Adani Wilmar IPO listing and post that the rally has been sort of exclusive. Ruchi Soya itself is a market leader in terms of its brand Ruchi Gold. Besides, it is a key player in the soybean market, soybean mustard oil and all such stuff," said Devang Mehta, Centrum Wealth Management.

Patanjali owns a 98.9 per cent stake in Ruchi Soya and post the issue its shareholding in the company will reduce to 81 per cent. It needs to cut this further to 75 per cent to comply with minimum shareholding norms.