Should you apply for Ruchi Soya FPO? | FPO Alert - YouTube

Hi, Ruchi Soya's FPO is opening on 24th March.

If you want to apply for that then you can apply for the FPO of Ruchi Soya from the sub-section of IPO in Explore section of the Groww app.

This process is just like investing in an IPO.

All you have to do is enter the total number of shares and the bid price to complete your application by clicking Continue.

But you should know all the details about the company before making the decision to invest in Ruchi Soya's FPO or not.

So today we will tell you about Ruchi Soya's business and its upcoming FPO.

Now let's talk About the company.

Ruchi Soya is one of the largest edible oil manufacturers in India.

This company is the market leader in Soya Foods in India.

This company is a part of Patanjali Group, one of the leading FMCG companies in India.

Ruchi Soya participates in the upstream and downstream segments of the Palm and Soya segment in India.

Ruchi Soya is the largest in India in terms of sourcing palm oil in terms of allocated areas.

The company manufactures various products under its flagship Nutrela brand such as

Nutrela Soya Chunks Nutrela High Protein Flour

Nutrela oils (mustard, soybean, sunflower, and gold) Nutrela Honey

Nutrela had a 40% market share in the textured soy products segment as of March 2020.

It acquired Patanjali's food products and added packaged food items such as biscuits, rusks, noodles, and breakfast cereals to its portfolio.

All these products are sold under the Patanjali brand in the market.

It also manufactures oleochemicals from edible oil by-products such as soap noodles, glycerin, distilled fatty acids, oil derivatives, etc.

These are used in various sectors such as greases, lubricants, paints, crayons, personal care, cosmetics, pharmaceuticals, etc.

It has a large presence in Palm Oil Plantations which manufactures Crude Palm Oil, Crude Palm Kernel Oil, and Palm Kernel Cake.

These plantations are run in a public-private partnership model with the state government.

Ruchi Soya has started a new business of nutraceuticals in FY22 in which it manufactures dietary supplements and nutritional products.

It has 23 plants out of which 10 are oil crushing and refining units with a crushing capacity of 3.71 MMT and refining capacity of 3.92 MMT.

Ruchi Soya's distribution network consists of 97 sales depots, 4,763 distributors, and 4,57,788 retail outlets.

Along with this, the company also has full access to Patanjali's distribution network which includes

3,409 Patanjali Distributors, 3,326 Arogya Kendras, 1,301 Patanjali Chikitsalaya, 273 Patanjali Mega Stores, 126 Patanjali Super Distributors.

Under Patanjali's Distributors & Super Distributors, it has 5,45,849 customer touchpoints with 47,316 pharmacies and medical stores.

Through this FPO, Ruchi Soya seeks to fund repayment of its borrowings of Rs 2664 crore and working capital requirements of Rs 593 crore.

Now let's talk about investment pros.

The biggest advantage of Ruchi Soya is its association with Patanjali.

Corporate Parentage gives the company full access to Patanjali's vast distribution network, doubling its effective distribution network.

Ruchi Soya also has a lot to do with Patanjali's brand association as both the companies are associated with the theme of healthy living.

India's nutraceutical segment is projected to grow at a CAGR of 20% to reach a market size of Rs 1.27 lakh crore by FY25.

The market expansion and capture of its new nutraceutical business may have to do with the brand association of healthy living and healthy diets.

Ruchi Soya's next big strength is its strong Nutrela brand and market presence.

The domestic market for Branded Soya Chunks is expected to grow at 14% CAGR till FY25.

The market share of the branded segment in this segment is also expected to increase from its current level of 44% to 55% by 2025.

This is highly appreciated by Ruchi Soya as their Nutrela brand is the market leader with a 40%+ market share.

Palm oil is India's largest used edible oil.

Ruchi soya has India's largest palm oil plantation area where it gets an advantage over palm oil processing.

The company is present in the palm oil supply chain through which it gets benefits from backward integration.

Now let's talk about investment cons.

81% of the company's revenue in FY21 came from the edible oil segment, which sells mostly palm oil and soybean oil.

There is a lot of competition in the edible oil segment which puts a lot of pressure on the pricing power, margins, and profitability of the company.

The Company's cost of raw material was 83% of the FY21 core total revenue which is very high.

Thereby, raw material price inflation could have a huge impact on the company's profitability.

The company had to go through bankruptcy in 2017.

Patanjali had bought out Ruchi Soya in 2019 and has turned the company back into a profitable one.

But Ruchi Soya's last 5 years' sales CAGR is 10%.

Its FY21 sales of Rs 16,382 crore are far from all-time high sales of Rs 28,000 crore in FY15.

Now let's talk about the company's financials.

As you can see on your screen, the figures are given in crores.

On 31st march 2019 and 2020, the Total assets figure is showing almost similar.

On 31st March 2021, the Total assets figure reached 9000 crores.

In Total Revenue, we can see an increase.

On 31st March 2019, it was 12829 crores and in 2020 it reached 13175.

By end of FY21, it reached 16382.97 crores.

Profit after tax was 34.12 by end of 2019.

By 2020, it reached 7714 which is quite a good increase.

By 2021, it reached 680.77

Now let's talk about some important ratios.

Net profit margin is 4.16%

Operating profit margin is 5.4%

Return on equity is 78.6%

PE is 28.26

Industry PE is 51.76

Debt to equity is 0.71

Current ratio is 2.23%

2 years sales CAGR is 13%

2 years profit CAGR is 346.68%

5 year sales CAGR is -10%

Now let's talk about the FPO details.

As you can see on your screen, its FPO opening date is 24th March 2022.

FPO closing date is 28th March 2022.

Its price band is Rs.615-650 per equity share.

1 market lot is 21 shares.

The issue size is Rs.4300 crores and the amount is Fresh Issue.

Its listing date is 6th April 2022.

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