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Ruchi Soya

rahul das's picture
Submitted by rahul das on February 28, 2010 - 07:52

Ruchi soya with 12000 cr revenue and 50 cr profit , what's wrong ?

I like food sector overall for next decade and Ruchi is one of the company that can be a big hit. But there are serious questions on why there is only 50 cr profit for 4th largest fmcg company in India

May be not a huge brand portfolio that usually provides better profit margin. There is interest burden due to high debt,  As compared KS OIl stock is not liked much by investors. Not they are mrging other group companies into a single one . What is reasoning ? Not sure.

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About rahul das

Author is Investment strategist at top 5 broking firm based in Mumbai.

savita's picture
Submitted by savita on February 18, 2010 - 23:18

Why is Ruchi Soya piling debt ?

Ruchi Soya with revenue of 12000 Cr is leading FMCG brand in India. I was looking at it's balance sheet and noticed that long term debt has gone to 1800 Cr in 09 vs 1000 cr in 2006.

Interestingly cash and bank balances has gone from 600 cr to 1100 cr in same period.

It's interesting to see that company is borrowing more money while keeping high bank balance . Are the making more in interest income or debt is too cheap ?

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Ajay Khandelwal's picture
Submitted by Ajay Khandelwal on February 16, 2010 - 10:56

Ruchi soya is worth the risk

With sales of 12000 Cr and market cap of 2000 cr, Ruchi soya stocks are cheapest in it's category. Although there is debt burden of 1900 Cr, still  based on price/sales ratio this is most reasonable stock in food oil category.

KS OIL with sales of 3000 cr is at market cap of 2800 cr plus debt of 900 cr.

The key differance is profit margin , Ruchi had profit of 65 cr last year on sales of 12000 cr , while KS oil had profit of 165 cr.

I don't trust the number that much , sales and profit all can be cooked.

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