Ruchi Soya FPO Review, Broker Views, Subscribe or Avoid


Last updated on April 5, 2022

FPO DetailsRuchi Soya FPO GMPAllotment Status

Ruchi Soya FPO is all set to open for subscription on 24 March 2022. The company is among the largest FMCG players in the Indian edible oil sector. Ruchi Soya FPO review is aimed to bringing readers up to the speed with regards to the company’s business, strengths and valuation.

Ruchi Soya FPO Review – Strengths

  • Strong promoter pedigree of Patanjali group, a leading FMCG and wellness-oriented brand
  • Experienced leadership and management team
  • Upstream and downstream integration and one of the key players in Oil Palm Plantation
  • Effective procurement of key raw materials required for the business
  • Strong, established and extensive distribution network
  • Strong brand recognition in the Indian market and recall value

Ruchi Soya FPO – Risk Factors

  • Business is vulnerable to variations in demand as well as changes in consumer preferences
  • Significant dependence on edible oil products (84.51% of revenues in FY2021)
  • Dependence on third-party suppliers for raw materials
  • Recent foray into nutraceuticals could impact operations and financial performance

Ruchi Soya FPO Analysis – Financial Performance

 FY2019FY2020FY2021H1 FY2022
Net income34.17,714.6680.8337.8
Margin (%)0.358.54.23.0
Figures in INR crore unless specified otherwise

Ruchi Soya Valuations & Margins

PE ratio26.71 – 28.24
RONW (%)4,950.6078.60
ROCE (%)2.504.4311.07
EBITDA (%)1.733.486.22

Ruchi Soya FPO Review – Subscribe or Avoid?

Ruchi Soya is a turnaround case after its acquisition by Patanjali Ayurved. The company is a leading fully-integrated edible oil refining company. It is present across the entire value chain in palm and soya segment, with a healthy mix of upstream and downstream business. Its integration extends to the oleochemicals and other by-products and derivatives business.

In this sense, the company is comparable to recently-listed FMCG player Adani Wilmar which rewarded IPO investors very well. Similar is the case for Ruchi Soya which is a major player in the edible oil segment but has forayed into other verticals lately.

The company is the pioneer and largest manufacturer of soya foods in India under the ‘Nutrela’ brand. Ruchi Soya has also expanded its packaged food portfolio by acquiring the ‘Patanjali’ product portfolio of biscuits, cookies, rusks, noodles, and breakfast cereals.

In terms of manufacturing capacity, the company is well placed with 23 processing plants (17 currently operational) including 10 oil crushing and refinery units and 1 biscuit manufacturing plant with annual processing capacity of 27,900 MT. The company has pan India network of over 97 sale depots, 4,763 distributors who in turn reach out, directly to 457,788 retail outlets in the urban, semiurban and rural areas of the country.

So far, the company has done well and it is not difficult to visualize a unified future for Patanjali Ayurved and Ruchi Soya, gaining from the backing of Baba Ramdev. Robust demand scenario for FMCG industry and a clear vision of profitable growth are other advantages with Ruchi Soya stands to benefit from. Following the bankruptcy proceedings, it is already free from previous baggage and majority of the FPO proceeds are also earmarked for debt-reduction.

In terms of valuations, Ruchi Soya has kept the offer’s pricing in the range of INR615 – 650 per share. This translates into a pre-offer P/E multiple range of 26.71 – 28.24 based on FY2021 earnings. The comparable figure for last 12 months and after including the offer dilution stands at 26.6. This is substantially lower than Adani Wilmar’s 66.9. Considering the company’s post-issue market cap of INR23,530 crore, its Price/Sales ratio for annualized FY2022 works out to 1.04, which is again lower than Adani Wilmar’s 1.43.

Overall, Ruchi Soya FPO review highlights the several positives of the company which has a clearly laid path to better profitability backed by attractive valuations. The offer is also attracting a small premium in the informal market indicating chances of positive listing. Nevertheless, an investment decision needs to be taken keeping individual risk appetite into consideration.

Ruchi Soya FPO Review – Broker Calls

Angel One – Subscribe
Arihant Capital –
Ashika Research – Subscribe
Asit C Mehta –
BP Wealth –
Canara Bank Securities – Subscribe
Choice Broking – Subscribe
Elite Wealth –
GEPL Capital –
Hem Securities – Subscribe
ICICIdirect – Unrated
KR Choksey – Subscribe
Marwadi Financial Services –
Motilal Oswal –
Nirmal Bang –
Religare Broking –
Samco Securities – Subscribe with caution
Share India Securities –
SMC Global – 2/5
Systematix – Not rated
Ventura Securities – Not rated


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