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

April 2: 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 the last two months after emerging out of a corporate insolvency resolution process at the NCLT. 

Small cap stock Ruchi Soya industry, that was acquired by Patanjali Ayurveda in late 2019, scripted a trailblazing comeback from 52-week lows as it has since risen over 5,300 cent to hit all-time high of Rs 162 on March 30, rising from a low of Rs 3.28 hit on July 24, 2019, the Economic Times reported.

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.

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, Arcelor Mittal took over Essar Steel for Rs 42,000 crore in November 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.

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