Ruchi Soya- how the stock is making most cryptos look adorable
9000% returns in 5 months?! Yes, you read it right.
If you think the returns are unbelievable, the tale that led to this is even better.
Facing a crisis in business with declining margins and largely unutilized capacity, and their unhedged longs in a bearish commodity market only added to their woes.
The lenders initiated the Corporate Insolvency Process. Yes, Ruchi Soya couldn't make ends meet! They owed a whooping 12,000 Crores to their lenders.
Patanjali acquires a 99% stake in the Company through the insolvency process.
Here's where things get interesting.
Patanjali brought in 4,000 Cr to retire the Company's debt, with the banks having to take a haircut of ~50% of what they were owed.
But where did Patanjali come up with that kind of money?
~75% of the 4,000 Cr were borrowed from the very banks that wrote off the debts
What was the collateral used for loan?
The very shares of Ruchi Soya that Patanjali acquired.
But it doesn't end there.
What transpired thereon, is certainly shrouded in mystery.
The stock re-listed in 2020 at ₹16.5 in the markets and within a few months shot up to ₹1,500. That's over 9,000%. With the upcoming FPOs and its lofty traded price, the Company stands to raise huge amounts of capital with considerably lower dilutions.
Was this really a master stroke? Let me know your thoughts.