This post on Ruchi Soya FPO attempts to bring out consolidated brokerage views based on information collated from various sources and reports in public domain that can help investors to decide whether they should subscribe to Rolex Rings IPO or not.
Related Posts : Ruchi Soya FPO Review
Consolidated Brokerage Views on Ruchi Soya FPO
Angel Broking: “: In terms of valuations, the post-issue FPO TTM P/E works out to 26.6x (at the upper end of the issue price band), which is low compared
to its peers Adani Wilmar (TTM PE -57.8x). Further, RSIL has strong brand recall, wide distribution, healthy ROE (FY21). Considering all the positive factors, we
believe this valuation is at reasonable levels. Thus, we recommend a subscribe rating on the issue.”
Ashika Stock Broking: “Considering Ruchi Soya’s strong brand recall, wide distribution, better financial track record and healthy ROE, we have a positive view for the FPO. It is recommended to “subscribe” the issue from the long term perspective”
Canara Bank Securities: “Ruchi Soya was acquired by Patanjali Group . The company is one of the largest in edible oil sector and largest manufacturers of soya foods brand Nutrela. As the company was acquired, they have forayed into packaged food portfolio of Patanjali such as biscuits, cookies, rusks, noodles and breakfast cereals. The company has recently forayed into nutraceuticals segment. The edible oil segment is contributing 85% at present that is expected to be down as the salience of food
and nutraceutical segment becomes large. The company has a EBITDA margin of ~6% which the company is looking to improve to double digit. As the object of the FPO is to repay the debt and fund working capital, we believe that the key to watch would be its performance in foods and scaling of nutraceutical segment together with margin. Considering its valuation vis a vis its peers we recommend SUBSCRIBE for long term for the issue.”Capital Market : ” Score 46/100 ; The EPS for FY2021 was Rs 31.9 and thus on FY2021 EPS the PE works out to about 28.2 times. There is no listed bearing ring manufacturing company and thus the company must be compared with other forging companies. In comparison the Bharat Forge quotes at 113.2 times of its standalone FY2021 EPS. The MM forging and Ramkrishna Forging quotes at a PE of 39.3 times and 127.3 times, respectively, on their consolidated FY2021 EPS.”
Capital Market: “Score 48/100; The TTM EPS (excluding extraordinary items and relevant tax) on post-issue equity works out to Rs 24.50 (boosted by deferred tax credit of Rs 4.6 per share in March 2021 quarter). At the upper price band of Rs 650, P/E works out to 26.55.The higher end of the price band represents 29% discount from its price of Rs 916 as of 22 March 2022. However, currently only 1.1% of pre-issue equity is listed. As of 22 March 2022, its listed peers such as Adani Wilmar trades at TTM P/E of 57.56, Marico trades at TTM P/E of 52.62, Dabur India trades at TTM P/E of 51.70, Britannia Industries trades at TTM P/E of 50.35, Zydus Wellness trades at TTM P/E of 30.39, Godrej Agrovet trades at TTM P/E of 25.55, ITC trades at TTM P/E of 20.82 and Agro Tech Foods trades at TTM P/E of 93.76. For FY21, Ruchi Soya Industries OPM and ROE stood at 5.85% and 16.75% respectively, compared to 3.57% and 23.89% for Adani Wilmar, 19.77% and 36.17% for Marico, 20.94% and 22.09% for Dabur India, 19.10% and 52.53% for Britannia Industries, 18.45% and 2.59% for Zydus Wellness, 9%and 15.29% for Godrej Agrovet, 34.51% and 21.80% for ITC, 5.94% and 7.17% for Agro Tech Foods respectively.”
Choice Broking: “At higher price band of Rs. 650, Ruchi Soya is demanding an TTM EV/S multiple of 1x, which is inline to its only listed peer i.e. Adani Wilmar Ltd. The edible oil business is likely to have a secular growth trend, but there is a huge untapped market for its Food & FMCG business segment. Thus, we assign a “SUBSCRIBE” rating for the issue.”
Hem Securities: “Company is bringing the issue at price band of Rs 615-650 per share at price earnings multiple of 28times on pre issue FY21 eps basis. Company with upstream and downstream integration is one of the key players in oil palm plantation & have developed an effective strategy to procure the key raw materials required for business. Also company’s products enjoy strong brand recognition in the Indian market & benefit from a strong, established and extensive distribution network. .Company has foray into health and wellness space with launch of Nutraceuticals & is Pioneer and market leader in branded TSP space”.
KR Choksey: “The industry is valued at TTM PE of 31.5x and Ruchi Soya’s TTM PE multiple is 33.5x while the FPO is valued at a multiple of 21x. Hence, we recommend ‘SUBSCRIBE’ for the listing and long term gains for this FPO..”
Marwadi Financial Services: “The company is one of the key players in Oil Palm Plantation with upstream and downstream integration and enjoys strong brand recognition in the Indian market. Also it is available at reasonable valuation as compared to its peers and reasonable discount to its current market price “Considering the FY21 EPS of Rs.18.81 on a post issue basis, the company is going to list at a P/E of 34.56x with a market cap of Rs.235,297 mn whereas its peers namely Agro Tech and Marico are trading at PE of 96.26x and 54.62x.”
SMC: “Score 2/5 ; “The company is a diversified FMCG and FMHG focused company with having a wide range of products. The company is a pioneer in soya chunks which are associated with nutrition and good health. However, on valuation part, it looks expensive. The company plans to utilize the entire issue proceeds for furthering the company’s business by repayment of certain outstanding loans, meeting its incremental working capital requirements, and other general corporate purposes. The meaning thereby is that the company is not in the expansionary mode and still trying to repay its existing debt. A long term investor may opt the issue.”
SP Tulsiyan Website: “Both Ruchi Soya and Adani Wilmar are expected to close FY22 with PAT of about Rs. 800 cr, but for FY23E, Adani’s PAT is likely to be Rs. 1,100 cr over Rs. 1,000 cr for Ruchi Soya. M cap of Adani Wilmar is Rs. 53,000 cr and Ruchi Soya’s present m cap is at Rs. 26,250 cr. Even if Rs. 4,300 cr is added, m cap comes to Rs. 30,500 cr. But Adani’s fundamentals are stronger given its size (revenue 2x of Ruchi), debt free status, higher credit rating (A+ vs A- for Ruchi Soya) and growth prospects. Adani is expanding capacity, with potential to double revenue in next 4 years, whereas FPO may not materially boost Ruchi Soya’s topline and only debt will lower, yet it will have debt of Rs 800 cr (net). Infact, lower interest expense will increase PAT but EPS may not jump materially, due to huge dilution.”
Ventura :”During FY19-22E, RSIL’s revenue/EBIDTA/PAT grew at CAGR of 23/132/121% respectively. During FY19-22E, RSIL’s segment revenue Seed extraction/ Vanaspati/ Oils/ Food products/ Power generation/ Others grew at CAGR of 0.3/ 15.6/ 24.7/38.1/ 5.2/ 50.9% respectively. At the FPO price of INR 650 (upper band) the stock is trading at FY22E P/E of 28.4X. We initiate coverage with a SUBSCRIBE for long term investing. Our target price of INR 1,177 (15X FY24 earnings) represents a potential upside of 31% from the offer price of INR 900 over a period of 18-24 months. Better than expected recovery in the global economy, a rebound of the domestic automotive industry and the management’s guidance on higher capacity utilization in the coming years bolster our confidence in improving revenue growth and profitability.”
Standard disclaimer: Standard disclaimer: I am not a SEBI registered analyst /investment adviser and above information is collated from various online sources and is for educational purpose only. Please visit individual brokerage sites to read the actual reports. Please do not make your investment decisions based on this info as it is not complete and exhaustive. Please do your own due diligence as stock market investments have high degree of inherent risk.