65% leap in a single month! Ruchi Soya needs to present extra weight with wholesome meals

NEW DELHI: Ruchi Soya shares hit the upper price Thursday after the company announced its foray into nutraceuticals & wellness products. The company will initially launch 10 products under the “Patanjali” and “Nutrela” brands.

The scrip rose 5 percent to hit Rs 1,137.50 on Thursday. BSE Sensex closed with a record 52,232, up 383 points or 0.74 percent.

Ruchi Soya is up around 75 percent last year, with an increase of over 65 percent from Rs 690.4 to Rs 1,137.5 last month. However, it is still over 25 percent below its all-time high of 1,535 rupees, which it hit in June 2020.

The company plans to offer a range of products in different categories over the course of the next year, it said. The entire product range offers 100 percent vegetarian nutrition. The company plans to use the joint branding of ‘Patanjali’ and ‘Nutrela’ for packaging, promotion, advertising and marketing of the first line of 10 products.

Ruchi Soya has not yet announced its March quarter results. The company had net profits of Rs 7,672.02 crore on sales of Rs 13,117.79 crore for the 2019-20 financial year.

Analysts have mixed views on the stock.

Likhita Chepa, senior research analyst at CapitalVia Global Research, said Ruchi Soya is introducing the nutraceutical line amid the pandemic, when demand is driven by lifestyle changes, rising health awareness and pressures on health care and nutritional supplements.

She expects the stock to climb 15 percent over the next 18 months and has a target price of Rs 1,380 for the stock.

said it has obtained a non-exclusive renewable license to use the Patanjali brand, for which Ruchi Patanjali Ayurveda (PAL) will pay a royalty of 1 percent of the net production volume.

In December 2017, yoga guru Ramdev-led Patanjali Ayurveda acquired Ruchi Soya after it landed in NCLT with a debt book of over Rs.12,000 billion. The manufacturer of Ayurvedic products paid 4.111 billion rupees to its financial creditors.

“When you look at past performance, you can’t be sure what your earnings or topline will be in five years. The current reviews do not inspire confidence either. Therefore, the stock seems to me to be more of a speculation than an investment, ”said Rahul Shah, Co-Head of Research at Equitymaster.

The entire range of nutraceuticals and wellness products are manufactured by PAL in the state-of-the-art facility in Patanjali Food and Herbal Park, Haridwar, as part of a contract manufacturing process, the company said.

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