Ruchi Soya's FPO Update, Adani Enterprises' New Acquisition, and Buzzing Stocks Today

Wed, 18 Aug Pre-Open

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Indian share markets ended on a positive note yesterday.

At the closing bell yesterday, the BSE Sensex stood higher by 210 points (up 0.4%).

Meanwhile, the NSE Nifty closed higher by 52 points (up 0.3%).

Tata Consumer Products and Wipro were among the top gainers.

JSW Steel and Adani Ports, on the other hand, were among the top losers.

The SGX Nifty was trading at 16,614, up by 51 points, at the time of writing.

Sectoral indices ended on a mixed note with stocks in the IT sector, healthcare sector and FMCG sector witnessing most of the buying interest.

Metal stocks, on the other hand, witnessed selling pressure.

Shares of L&T Technology and Tata Elxsi hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading up by 0.5% at Rs 47,480 per 10 grams at the time of closing stock market hours yesterday.

Speaking of the stock market, Brijesh Bhatia, Research Analyst at Fast Profits Report, shares why he thinks PSU banks are set to rally, in his latest video for Fast Profits Daily.

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Top Stocks in Focus Today

Among the buzzing stocks today will be Ruchi Soya Industries.

Edible oil producer Ruchi Soya Industries, owned by Ramdev's Patanjali Ayurved group, has received market regulator's approval to sell fresh shares through a follow-on public offer (FPO) to pare debt and cut promoter shareholding as mandated by the markets regulator.

Reportedly, the approval came last week on Saturday.

With the regulator's approval in hand, the company is looking to launch the share sale soon, as early as next week.

The pricing will be finalized close to the launch date, as per a person aware of the matter.

Ruchi Soya had filed a draft prospectus with the regulator for a Rs 43 bn FPO to raise fresh money.

While Ruchi Soya is a listed company with a discovered price in the market, an FPO allows a company to price its shares freely, and thus it may be priced at a sharp difference from the market price.

Patanjali had acquired the erstwhile bankrupt firm known for the Nutrela brand of products in 2019 for around Rs 43.5 bn through an insolvency and bankruptcy code (IBC) process.

Ruchi Soya's shares relisted on 27 January 2020 at Rs 16.10 and soared to a one-year high of Rs 1,535 on 29 June, largely on account of its extremely small public float.

The FPO will help the firm increase the public float, taking a step forward to meeting the minimum public shareholding (MPS) norm of 25%.

Currently, the company needs to increase public shareholding by only 9% to meet the MPS requirement and the remaining 15% is required to be completed by December 2022.

Maruti Suzuki share price will also be in focus today.

Maruti Suzuki may resort to a deeper-than-expected 30-40% cut in vehicle production this month, as the shortage of semiconductors remains severe.

For the nation's top car manufacturer, this would mean a loss of 50,000-60,000 units in production and Rs 25 - 30 bn in revenue in August.

This could also affect the availability of popular models in the upcoming festive season, with demand already on an upswing.

The Indian unit of Japan's Suzuki Motor was until recently expected to lower its production plans for this year by 5%, or 70,000-80,000 vehicles.

The output cut in August alone would be about three-fourths of that, according to a media report.

The company is now likely to produce 110,000-120,000 units this month, they said.

The automaker has initiated production rationalisation at parent Suzuki Motor's Gujarat plant in the first fortnight of August and has now expanded it to its own Manesar facility in Haryana.

Production at Manesar is likely to go down to 45,000 units in August versus the average production of 65,000 units a month.

At Suzuki Motor Gujarat, output is likely to be cut by 65-70% to 15,000-20,000 cars, they said.

The impact on the Gurgaon plant, which makes entry-level cars, is relatively less.

Global forecasting firm IHS Markit expects the July-September quarter to be the worst in terms of chip shortage in India.

IHS Markit expects the situation to remain uncertain in the coming months too.

Value Stocks: Stocks with Limited Downside but Good Upside Potential

Adani Enterprises to Acquire Sadbhav Infra's Maharashtra Check Post Arm

Adani Road Transport (ARTL), a wholly owned subsidiary of Adani Enterprises has acquired Maharashtra Border Check Post Network (MBCPNL) from Sadbhav Infrastructure Project at an enterprise value of Rs 16.8 bn, the company said in a statement.

MBCPNL has exclusive fee-collection rights from commercial vehicles at 24 entry points to India's richest state, Maharashtra.

This implies an EBITDA (earnings before interest, taxes, depreciation and amortization) multiple of approximately 7 times, it said.

MBCPNL is an SPV (special purpose vehicle) promoted by a consortium led by Sadbhav Engineering (parent of SIPL). The company was awarded the concession by the Maharashtra government to build, operate and transfer 24 modernised and computerised integrated border check posts.

Of these, 18 are operational, four near-operational, one near completion and one under construction.

MBCPNL is an important gateway connecting Maharashtra with six neighbouring states and covers over 20% of the commercial road traffic in India.

The concessions are long term, till 2033, and have inflation protection (5% per annum and compounded every three years).

ARTL will begin by acquiring 49%, with the option to acquire additional stake, subject to approvals.

Aramco is in Advanced Talks on Up to US$25 Bn Reliance Deal

Saudi Aramco is in advanced talks for an all-stock deal to acquire a stake in Reliance Industries' oil refining and chemicals business.

The Saudi Arabian firm is discussing the purchase of a roughly 20% stake in the Reliance unit for about US$20 bn to US$25 bn-worth of Aramco shares, as per people aware of the matter.

Mukesh Ambani's Reliance Industries could reach an agreement with Aramco as soon as the coming weeks.

A deal would forge closer ties between the world's biggest oil exporter and one of the fastest-growing energy consumers.

It would seal more than two years of negotiations and mark Aramco's first all-stock deal since its initial public offering (IPO) in 2019.

Ambani confirmed talks about a deal with an implied stake valuation of US$15 bn that same year. Discussions were delayed by the onset of the coronavirus pandemic and slump in crude oil prices.

Since then, the energy markets have recovered with crude prices jumping around 35% this year to almost US$70 a barrel.

The above transaction would help Aramco reach its goal of more than doubling refining capacity to between 8 m and 10 m barrels of crude a day.

How this deal pans out in the coming days remains to be seen. Meanwhile, stay tuned for more updates from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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