Ruchi Soya stock hits upper circuit of 20%, here's why

Shares of Ruchi Soya zoomed 20 per cent in early trade today after the board of edible oil major approved the red-herring prospectus (RHP) for its follow-on public offer (FPO) of around Rs 4,300 crore. The FPO will be launched in the capital market on March 24.

Ruchi Soya stock opened with a gain of 6.76% at Rs 858 against the previous close of Rs 803.70 on BSE. Shares of Ruchi Soya touched an upper circuit of Rs 964.4, rising 20% against the previous close of Rs 803.70 on BSE.

Ruchi Soya stock trades higher than 5 day, 20 day, 50 day and 100 day moving averages but lower than 200 day moving averages.

The stock has gained 34.86% in one year and risen 13.22% since the beginning of this year. In early trade, 0.55 lakh shares of the firm changed hands amounting to a turnover of Rs 5.05 crore on BSE.

Market cap of the firm rose to Rs 28,530 crore. The stock hit a 52-week high of Rs 1,377 on June 9,2021 and a 52-week low of Rs 619 on April 22,2021.

"Pursuant to the approval accorded by the Board of Directors of the Company ("Board") at its meeting held on March 10, 2022, read along with the approval accorded by the Issue Committee, a committee of the Board, has passed resolution by circulation on March 11, 2022," Ruchi Soya said.

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The issue will open on March 24 and close on March 28, 2022, the company said.

The dilution through the FPO would help Baba Ramdev-led Patanjali Ayurveda, which owns Ruchi Soya, to adhere to the minimum shareholding norms. In August 2021, the firm had received capital markets regulator Sebi's go-ahead to launch the FPO. It had filed the draft red herring prospectus (DRHP) in June 2021.

Ruchi Soya will utilise the entire issue proceeds for furthering the company's business by repayment of certain outstanding loans, meeting its incremental working capital requirements and other general corporate purposes.

In 2019, Patanjali bought Ruchi Soya, which is listed on the stock exchanges, through an insolvency process for Rs 4,350 crore.

Ruchi Soya primarily operates in the business of processing oilseeds, refining crude edible oil for use as cooking oil, manufacturing soya products, and value-added products. The company has an integrated value chain in palm and soya segments, having a farm-to-fork business model. It has brands such as Mahakosh, Sunrich, Ruchi Gold and Nutrela.