Patanjali Foods, the erstwhile Ruchi Soya Industries, on Wednesday, said that its promoters are planning to sell shares to institutional investors in June to meet minimum public shareholding norms.
Baba Ramdev-led Patanjali Foods Ltd acquired the erstwhile Ruchi Soya Ltd in September 2019 through a corporate insolvency resolution process.
Patanjali Foods, formerly Ruchi Soya Industries, is engaged in the business of edible oils, biscuits and soya products.
“We are planning to meet the minimum shareholding norms as prescribed by the market regulator SEBI,” said Baba Ramdev in an interview with the Press Trust of India (PTI). Moreover, he said that the company aims to dilute around a six per cent stake in June through Qualified Institutions Placement (QIP) and Offer for Sale (OFS).
According to Rule 19A(5) of the Securities Contracts (Regulation) Rules, 1957, it is mandatory for listed entities to have a minimum public shareholding of 25 per cent. However, the public shareholding or the stake that retail investors hold in Patanjali Foods is merely 19.18 percent, and this needs to be increased to 25 percent.
Leading bourses — Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) had frozen the shares of 21 promoter entities of the company, including Patanjali Ayurved and Acharya Balkrishna, who is the managing director of Patanjali Ayurved for failing to meet minimum public shareholding norms.
The company recently reported its results. It registered an 18.16 per cent growth in its net profit for the March quarter (Q4FY23) to ₹ 349.38 crores compared to ₹ 295.69 crores reported in the corresponding quarter a year ago. It posted revenue growth of 18.15 per cent to ₹ 7,872.92 crores in Q4FY23 as against ₹ 6,663.72 crores in the same quarter a year ago.
Patanjali Foods is a mid-cap company with a market capitalization of ₹ 37,919 crores. It has a low return on equity of 11.07 per cent but an ideal debt-to-equity ratio of 0.15. Its shares were trading at a price-to-earnings ratio (P/E) of 42.58, which is significantly higher than the industry P/E of 21.46, indicating that it might be overvalued as compared to its peers.
Written by Simran Bafna
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