Ruchi Soya Industries Ltd Fundamental Analysis

In this blog, we will discuss Ruchi Soya Industries Ltd. The stock price of this company is currently trading at 1,237.85. And the stock price was touches 1519.85 level on 26 June 2020. Stock prices of other companies are going down but how did the stock price of this company soar? We will discuss the reason behind stock price going high and it’s fundamentals.

In 1986, Sahara Family started its business in Madhya Pradesh. Many brands of this company became quite popular, such as Ruchi Gold, Sunrich, Nutrela, and Mahakosh. In the Oils and Soya Food Business, this company came to one of the top companies. For the expansion of the company, the company was taking a lot of debt from banks. The company’s debt had exceeded more than 10,000 crores rupees. The company was bringing in good revenue from the loan taken, but due to the low-profit margin, its profit was not much. Because of this, the company was struggling to repay the debt. The reason for this, the company came to the verge of bankruptcy. And the company was delisted from the stock market list in the last year.

Ruchi Soya Industries products Infographics
Ruchi Soya Industries products Info graphics

Ruchi Soya Industries Acquired By Patanjali:

The action was being taken for bankruptcy. At that time, Patanjali, showing interest, acquire the company in September 2019 with high bids. Some money went to the lending banks, and some money went to build the company. Now Patanjali has a 98.9 percent shareholding of the company. Much of the money that has been invested in buying the company has been taken by taking loans from banks. When the Ruchi Soya Foods were listed again in January 2020, its market cap was around 500 cr, and now its market cap has been 42,711 cr. And now, according to the valuation, this company is coming to the top 100 companies in India.

In India, the initiative for Vocal for Local is going on, if this company performs well, and manages very well then it will come top in the FMCG sector. Patanjali thinks their turnover to be higher than HUL within the coming years. Patanjali has made a good grip on selling indigenous products. Many people were amused when Baba Ramdev Ji said, that Patanjali will get ahead of Hindustan Unilever. Now it has to be seen, Patanjali manages its operations in the market very well. Now Patanjali is a massive company in India. Their products are easily available in retail shops, and they also sold very quickly. Patanjali sells products that are used in daily life, even the cost of the products is reasonable, and soya foods sell edible oils that also sell a lot in the market too.

Know the reason behind stock price gain sharply of Ruchi Soya Industries:

As of now, Patanjali has 98.90% stake in Ruchi Soya Industries and 0.82% shareholding in public. Patanjali cannot sell steak for a year as per the SEBI guidelines, and the trading volume in the publically is very low. When the buyers are more than the sellers, the stock price will gain. Something similar happened with this stock; the price of the stock increased sharply due to the heavy buyers. Due to the low stake of public holdings, the stock having trouble with the buying-selling process. Also, the stock having high fluctuation.

Should we Buy Ruchi Soya Industries Stock now?

We have to wait for it. Since there is a loss in many quarters of the company, if the new management makes the company profitable with good margins, then we can think about buying. As well as now the shareholding pattern is not proper for investing in this stock. Due to the low trading volume, there will be difficulties in buying and selling stocks.


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