Decline in edible oil stocks led by Baba Ramdev after the price floor was set; Plunges more than 17%

By Malvika Gurung — Patanjali-led edible oil maker Ayurved Ruchi Soya (NS:) has set the price range for its follow-on public offering (FPO), reaching capital market on March 24, 2022, at Rs 615 -650 /share.

The FPO will increase to Rs 4,300 crore, comprising shares with a nominal value of Rs 2 each, and the issue will close on March 28.

As the highest price range of the offer set at Rs 650/share was 35% off Thursday’s closing price, shares of the Baba Ramdev-led company plunged 17.3% at 831 apiece in early trading on Monday, and were trading 8.9% lower at Rs 915 apiece at the time of writing.

According to the red herring prospectus, the shares of the company will be credited on April 5, while trading will start from April 6.

The head of research at Share India Securities says that despite the company’s financial weakness, investors could potentially buy into the FPO, due to its strong base and track record, as well as the demands of its products.

An FPO means issuing additional shares after an IPO, and in line with SEBI’s requirement of at least 25% public ownership in a company, Ruchi Soya is issuing additional shares.

Indeed, currently, the Patanjali Group led by Baba Ramdev owns 98.9% of the edible oil maker, while public shareholders own around 1.1%.

Comments are closed.