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From NCLT to 4,800% returns: It’s a multibagger amid market mayhem

Not just that! The stock also scripted a trailblazing comeback from 52-week lows.

, ETMarkets.com|
Last Updated: Apr 02, 2020, 12.25 PM IST
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The scrip is on a secular bull run and has been hitting upper circuit limits ever since January amid huge demand.
New Delhi: As equity investors lost about Rs 50 lakh crore wealth in the brutal selloff triggered by the Covid-19 outbreak, one stock rallied over 1,000 per cent in last two months.

Not just that! The stock also scripted a trailblazing comeback from 52-week lows, as the company emerged out of the NCLT after a corporate insolvency resolution process.

We are talking about smallcap stock Ruchi Soya Industries, which was acquired by Patanjali Ayurved in late 2019. The stock has since risen over 5,300 cent to hit all-time high of Rs 162 on March 30, rising from a 52-week low of Rs 3.28 hit on July 24, 2019.

The scrip is on a secular bull run and has been hitting upper circuit limits ever since January amid huge demand. It traded at Rs 17 on January 27, 2020.

However, the average traded quantity on the counter in the past two weeks has been just 334. “After its acquisition by Patanjali, the shares were consolidated in the 100:1 ratio. Thus, there is no float available,” said Arun Mukherjee, a Kolkata-based investor and founding partner of SA Investment Advisers.

Investors fancy the stock, but there are no sellers. “It’s mainly demand-supply economics at play, leading to the rally,” Mukherjee said.

Ruchi Soya is one of the largest manufacturers of edible oils in India. It makes and sells edible oils, bakery fats and soya food primarily in India.

The edible oil range holds a number of oil and soya product brands, such as Mahakosh and Nutrela, which is the largest selling soya foods brand in the country with more than 50 per cent market share.

In December 2017, Patanjali 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.

This was the second largest insolvency case to see resolution under the Insolvency and Bankruptcy code (IBC). Prior to this, ArcelorMittal took over Essar Steel for Rs 42,000 crore in November 2019.

“The company is now debt-free, but we are keenly waiting for the numbers. Patanjali has grand plans for it, and we have to how they work out,” said Mukherjee.

He, however, didn’t recommend the stock. “There are absolutely no shares in the market. Numbers will tell a lot about it. Undoubtedly, Ruchi Soya has got massive potential.”

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