Ruchi Soya share price reverses the trend, falls 10% this week after rallying for 22 sessions

After a surprising rally that saw the stock surge 192% in 22 trading sessions, Ruchi Soya shares have seemed to reverse the trend, falling 10% so far this week. The Patanjali Ayurveda-led edible oil manufacturer has been a stock that has analysts fuming after its price skyrocketed from Rs 16.7 per share in January to Rs 1,535 apiece this month. This fall in stock price can be attributed to Ruchi Soya’s January-March quarter results, where the company announced a net loss of Rs 41.25 crore. Ruchi Soya, in the same period last year, reported a net profit of Rs 332.11 crore.

The edible oil manufacturer has a price-chart that leaves investors baffled. With over 99% of the shareholding with the promoter group the company has seen its shares beat the stock market blues even during one of the worst market sell-offs in recent years. Not only that Ruchi Soya took over Marico Ltd in terms of market capitalization last week, when its M-cap jumped to Rs 44,592 crore and Marico’s was at Rs 44,482 crore. However, even that has now changed. Ruchi Soya’s market capitalization dropped to Rs 40,246 crore, whereas that of Marico was at Rs 45,109 crore. Although it is still ahead of Punjab National Bank’s market cap, a lender that helped Baba Ramdev’s Patanjali Ayurveda buy Ruchi Soya last year.

Analysts continue to warn against investing in Ruchi Soya, citing its low public float. According to the shareholding pattern available with the stock exchanges, Ruchi Soya has merely 0.97% public shareholding with only 28 lakh shares available to retail investors and rest with the promoter group. Ruchi Soya’s standalone March quarter numbers show that the company’s total income came down to Rs 3,209 crore from Rs 3,725 crore in the previous quarter. Revenues across segments took a hit in the March quarter, except for wind turbine power generation.

Ruchi Soya was acquired by Baba Ramdev’s Patanjali Ayurveda last year through the NCLAT for Rs 4,350 crore. Majority of the funding was secured through debt. Currently the promoter group holds 99.03% in the company, however, the shareholding needs to be revised in the next 12 months. Public shareholding in a listed company should improve to 10% in 18 months since listing. The change in shareholding pattern, analysts say will force the price to go down.

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