Ruchi Soya stock surges 20% despite FPO facing hurdle; here’s why

Shares of Ruchi Soya dropped 3% in opening trade on Tuesday, in an otherwise positive broader market, after the market regulator SEBI directed Baba Ramdev’s Patanjali Ayurved-owned company to give an option to the investors to withdraw their bid for follow-on public offering (FPO). The regulator has asked the company to offer a three-day window to the investors who participated in Ruchi Soya’s ₹4,300 crore FPO to withdraw their application. The withdrawal window will close on March 30.

Reacting to the news, Ruchi Soya opened lower at ₹795.55, down 2.39% against previous close price of ₹815.05 on the BSE. The FMCG stock declined as much as 2.9% to touch a low of ₹791.05 in the opening deals. However, the stock soon pared losses and rebounded 20% to hit a high of ₹978.05 in the first hour of trade so far. Meanwhile, the BSE Sensex was trading 270 points, or 0.47%, higher at 57,862 levels.

In an exchange filing on Monday, Ruchi Soya said that the Securities and Exchange Board of India (SEBI) has asked the bankers of the company to give an option to investors in its ongoing FPO to withdraw their bids amidst the “circulation of unsolicited SMSes advertising the issue”. SBI Caps, Axis Capital and ICICI Securities are the book-running lead managers (BRLMs) to the FPO.

The messages were allegedly sent to Patanjali Ayurved users, recommending them to invest in the issue, which offered equity shares of the company at discount to the market price. The SEBI in its order said that the content of SMSes “prima facie” appears to be “misleading /fraudulent” and not in consonance with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

“As directed by SEBI, we wish to bring to attention of the investors that all bidders (other than anchor investors), have an option to withdraw their bids from March 28, 2022, till March 30, 2022. Investors should further note that bidding in the Issue is closed today i.e. March 28, 2022, and accordingly no further bids will be accepted in the issue. Any bids, after the bid/issue closure will be rejected,” Ruchi Soya said in a filing to the BSE.

“The above mentioned option to withdraw can be exercised by submitting a request for the same to the concerned designated intermediary, who shall assist in such withdrawal of bid cum application form, prior to the finalisation of the basis of allotment,” it added.

Ruchi Soya also clarified that the alleged message was not issued by it or any of its directors, promoters, promoter group, or group companies. Besides, the company has also lodged a first information report (FIR) with a police station at Haridwar to take up an investigation in respect to the circulation of the message.

The ₹4,300 crore FPO, which opened on March 24, was subscribed 3.60 times on the final day on March 28. The company received bids of more than 17.6 crore as against offer size of 4.89 crore shares. Ahead of the FPO, the company raised ₹1,290 crore from anchor investors. The FMCG company backed by Baba Ramdev’s Patanjali group launched FPO to meet SEBI's minimum public shareholding norm of 25% in a listed entity. After the FPO, Patanjali's shareholding in Ruchi Soya will come down to about 81% and the public would hold about 19%.