Patanjali-owned Ruchi Soya's FPO was open from March 24 to March 28 where the company invested Rs. Karna was looking to raise 4,300 crores.
The price band of ISS FPO share was Rs. 615 to Rs. 650 – which was a lot from his LTP i.e. the latest trading price of 882. The minimum order quantity of the share was 21 shares and retail investors can take a maximum of 14 lots. 35% of the issue size was reserved for retail investors and 15% for this. The rest 50% was for QIBs – Qualified Institutional Buyers
The FPO was a huge hit and was also subscribed 3.6 times, but then something happened between March 29 and April 5, on the day of allotment i.e. on April 6, the stock of Ruchi Soya fell by some 19% to Rs. 706 cross open.
Come let's see what happened as the shares fell 19% on the day of allotment.
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High Soya gets a big blow from SEBI
Due to an unsolicited SMS, market watchdog SEBI on March 29 issued a first-of-its-kind instruction to Investors, giving them an opportunity to withdraw from FPOs and this window remained open for some three days – with Total mixed in. Some 97 lakh bids were also withdrawn.
Interestingly, to date, SEBI has warned, and punished companies, but never before today has SEBI given such direction to any company.
Even before this directive, SEBI had warned Baba Ramdev that when he is giving a chance to people to become millionaires through a viral video and asking how everyone should buy Ruchi Soya shares.
Next, the board has fixed the allotment price of Ruchi Soya at Rs. Fixed at 650.
Notably, the closing price of Ruchi Soya on Tuesday, April 5, a day before the allotment, was Rs. 875.45, but on the day of allotment i.e. Wednesday, 6th April, this share opened at Rs. 706 cross. But then by 9.55 pm, the stock made a recovery and went beyond 763.
Ruchi Soya's FPO buyers get Rs. 650. But today i.e. on Friday 8th April, this stock is trading at some 855.25, as it is at 12.43 pm. So investors got a profit of 200+ per share or not? Off-late to 2 days I have not given so many figures even any promising ipo.
You will remember, that many analysts had given subscribe ratings to this FPO and we also shared this with you through this medium. Then a lot of investors also subscribed by looking at its fundamentals, future prospects, and business model.
Then when the SEBI directive came, all those investors who had implemented the fundamentals of the stock-and-only stock, all those investors saw the SMS controversy – must have heard but they did not fall for it – because they Focused on stock fundamentals and technicalities.
But Jinhon did apparently withdraw from the panic mode, based on a news story. Unfortunately, doing so is always at a loss for any investor. Apart from this, investors should also keep in mind while investing that they should never invest in any news, announcement, or emotional size.
As a stock market investor, it is very important for every investor that they should never look at any stock, IPO, FPO FOMO, or trend, but rather, based only on fundamentals. Invest only.
I know that of late we are getting this search not once but many times, but remember this time if we make learning our thumb rule, then surely we will be benefitted by going ahead.