65% jump in a month! Ruchi Soya seeks to add heft with healthy food

NEW DELHI: Shares of Ruchi Soya hit upper circuit on Thursday after the company announced its foray into nutraceuticals & wellness products. The company will initially launch 10 products under the brand ‘Patanjali’ and ‘Nutrela‘.

The scrip soared 5 per cent to hit to settle at Rs 1,137.50 on Thursday. BSE Sensex closed at a record 52,232, up by 383 points or 0.74 per cent.

Ruchi Soya has soared some 75 per cent in the last one year, with over 65 per cent gain from Rs 690.4 to Rs 1,137.5 coming in the last one month. However, it is still over 25 per cent shy of its all-time peak at Rs 1,535, which it had scaled in June 2020.

The company aims to offer a range of products across categories over the next one year, it said. The entire product range offers 100 per cent vegetarian nutrition. The company plans to use the joint branding of ‘Patanjali’ and ‘Nutrela’ for packaging, promotion, advertising and marketing the initial range of 10 products.

Ruchi Soya is yet to announce its earnings for March quarter. The company had clocked Rs 7,672.02 crore net profit on a Rs 13,117.79 crore revenue in FY2019-20.

Analysts have mixed views on the stock.

Likhita Chepa, Senior Research Analyst at CapitalVia Global Research, said Ruchi Soya is introducing nutraceuticals line amidst the pandemic, when demand is driven by changing lifestyle, increasing health awareness and a push for preventive healthcare and dietary supplements.

She expects a 15 per cent upside in the stock over the next 18 months and has a price target of Rs 1,380 for the stock.

said it has obtained a non-exclusive renewable licence to use the ‘Patanjali’ brand, for which Ruchi will pay Patanjali Ayurveda (PAL) a royalty of 1 per cent of the net manufactured volume.

In December 2017, yoga guru Ramdev-led Patanjali Ayurveda acquired Ruchi Soya after it landed up in NCLT with a debt book exceeding Rs 12,000 crore. The ayurvedic product maker paid Rs 4,111 crore to the financial creditors.

“By looking at its past performance, one cannot be sure what its profits or topline will look like five years from now. Its current valuations also do not inspire confidence. Thus, the stock seems more like a speculation than an investment to me,” said Rahul Shah, Co-Head of Research at Equitymaster.

The entire range of nutraceuticals and wellness products will be manufactured by PAL at the state-of-the-art plant located at Patanjali Food and Herbal Park, Haridwar, under a contract manufacturing arrangement, the company said.



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