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  • Category: Finance and Investments

    Why Ruchi Soya stock is increasing day by day?


    Having a query about stock market? Wondering why some stocks are increasing day by day as compared to others? Find advice from experts for your query here.

    Currently, the share market in India is moving up and in the bull rally. Now, most of the shares started a bull rally in May and June month. Out of the many multibagger stocks, Ruch Soya stock is moving up since Rs. 3 level and now it is trading at Rs. 1500 level. Can you please give a reason why the stock is moving up to the level 1500 from 3 in very short span of a few months?
  • Answers

    4 Answers found.
  • Ruchi Soya Industries share price rise is a unique example of bull trading. Ruchi Soya company was acquired by Patanjali in December 2019. This stock was relisted on the stock exchange, after that acquisition, on 27th January 2020 and commanded a small price of around Rs 16 only at that time. The company before this acquisition had a profit of Rs 32 crore during the year 2018-19. Due to its acquisition by Patanjali people became interested in it as Patanjali has a conspicuous big future in India as per the news and analysis done by the financier experts and the market players always try to accumulate shares of the companies which have a bright future.

    So, what has actually happened is an avalanche type of action in the stock market and due to sustained buying the stock rose to unprecedented heights. It always happens so in the market with some select stocks but we must remember that a part of this rise is fictitious and anytime it can start downwards journey and then it would stabilise at its real worth which is of course dependent on various factors including the demand and supply of these shares in the market. Some shrewd investors and market players take advantage of buying in such situations and then unloading them at a higher prices though there are always risks of getting trapped in that process.

    Anyway, just yesterday the Q4 2019-2020 results of Ruchi Soya are declared and they have reported that there is a loss of Rs 41 crore and due to that negative news the share is now coming down and today afternoon it has plunged down 5% from its apex value. So it may now start its journey downwards. The apparent bull run is now seems to be at its end. Those who have bought these shares recently would face the brunt of it as either they have to book loss or keep them for a longer time for the next such bull run if it ever happens again with this scrip. Strange are the ways of stock market.

    Knowledge is power.

  • The following may be the reasons for this increase.
    1.99.03% of this company shares are held by the various companies that are belonging to Patanjali group of companies. Only 0.97% of shares only are held by the public. Those companies are not trading their shares. The only public who are holding these shares is trading. As per SEBI, 28 lakh shares are held by the public. From that only 10,000 to 15000 are traded daily. This low trading is the main reason for the increase in this share price. Many analysts are asking SEBI to conduct an enquiry into this.
    2. Many people are believing and hoping that Patanjali Ayurveda may be merged ( Technically it is called reverse merging) in this Ruchi Soya. If this happens the shareholders in Ruchi Soya will have any entry to fast-moving FMCG company.

    Now the company announced a loss for the fourth quarter of the financial year 2019=20 . So.the share prices of the company ended 5% lower yesterday. So we may see some downwards trend. So keep watching. Take an appropriate decision at the appropriate time.

    drrao
    always confident

  • The share price of Ruchi Soya is rising consistently since the beginning of the year. If you see its upward movement, it has gone as high as Rs 1443 /- per share as compared to its initial price of Rs 17/- per share in the month of January '20.
    This company has been on the bussiness for around 34 years in the area of edible oil in India. During the period of 2001to 2015, it paid dividends whopping amounts during this period in a consistent manner.
    Then the company made a loss during the regime of 2016 to 2018. The loss was substantial to the extent of Rs 12,000 crore forcing it to enter the insolvency proceeding in December '17 and finally Patanjali was able to win the bidding war against Adani.
    Patanjali made the final deal of its acquisition with the resolution plan of over Rs 4350 crores followed by the restructuring process during the period of November '19.to January '20.
    It was relisted on January on 27 th January 2020 with the opening price of Rs 17/- per share showing a continuous increase of 5 percent every day. So far the value of the share price has shown tremendous growth but the question is how long it will continue in the similar fashion.
    This boom may be due to the farsightedness of Ramdev after taking over this company.
    But the future of the company lies with the demand of Ruchi Soya products apart from guidelines of Ramdev. Investors would like to see better performance of Patanjali products fuelling the spiral of shares of Ruchi Soya.

  • I want to add here that due to the strong reputation of the Patanjali group and interested buyers in the market the shares of Ruchi Soya spurted from a very low price (Rs 10-20) to very high price touching a level of almost Rs 1400-1500 in a few months. Everyone attributed it to the Patanjali group which took control of the company under it after the said acquisition. Being a consumer product having a good market demand it is apparent that share price of this company had to rise but this much rise was not justified from any angle. This type of unprecedented rise happens only in case of very strong companies having good fundamentals or where some inside trading or some malpractice is hidden behind these operations. Today I found a news item in the Economic Times that SEBI the apex body has constituted an enquiry in the unprecedented rise in the share price of Ruchi Soya. This enquiry clearly shows that the rise was created by some people who had interest in making money through this rise and they must have left the market in between by taking out the profits and some other gullible investors are trapped. So, details of these would only be available after the enquiry is completed but it shows that if the shares of a company suddenly spurt up then we should be cautious and curious about the reasons behind it and should not invest in it in a hurry. The downfall of the share prices of Ruchi Soya has already started in the market.

    Knowledge is power.


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