I have picked up standalone financial statement – profit and loss account of the company. Comparing to TTM with financial year of year 2018 surprised the auditors and the accounts experts. Operating profits have encouraged up from -5047 to +401 Crores, but if you look at the other income has moved up from 34 to 7506 Crores. Net profit registered by the company is 7672 Crores. From which source this huge flow of money in the tune of RS.7506 Crores has raised or pumped in to the balance sheet of the company?
What changed the game is change in ownership. Now Patanjali group hold 98.97% stake in this company. Patanjali group acquired Ruchi Soya by signing a corporate insolvency resolution for around RS. 4500 crores in September 2019. Look at the balance sheet, how size of equity is reduced. 50% of the debts of the company are paid off. Interest cost is reduced. Operating margins are increased. Above all major holding is with promoters only. Until and unless they will not press the selling in stock, how the profit booking will emerge. I am not suggesting buy or the sell in this stock, but yes can suggest a make or break point which is 1326, although there is no much trading in this stock, hence charts may not work or suggest much. Even in fundamentals biggest trigger is only 99% holding with promoters. Rest all is very much secondary.
In comparison of market cap (MV) / market value of the company is even more than many big brands like Marico, Colgate, and Gillette etc.
Just imagine how much money is been made by Patanjali Group by acquiring loss making Ruchi Soya. Today the market value of the company is above 44000 Crs. 99% of the big amount belongs to the Patanjali group. Forget about the small investors. There is a fundamental rule that if the stocks are with public investor’s price of those stocks should fall or at least should not go up. If stocks are with big investors / cash rich investors stocks should move up. There may be the exceptions, after all its stock market. In Bull Run all or most of the stocks move up and in bear markets most of the stocks tank. Again in bull markets many stocks don’t perform and same in the bear markets many stocks outperform. We are in the dynamic world where matrix and economic change very quickly. So always be ready to avail the opportunities and jump away quickly at the time of danger.
I have tried to set some filters to identify a turnaround case. If you have missed this opportunity looks for another one, where a big brand or the player, is pumping in huge funds to reduce the debts of the loss making company with intention to acquire major portion of the equity.
Disclaimer: This article is for the case study only, not suggesting any buy or the sell. This article is purely for the educational purpose only.
Indian Stock Market Tomorrow
Monsoon has knocked at the doors of North India. In the month of June 88% extra rain is been registered in MP. Good rains this year may boost some sentiments after gloomy sentiments due to covid-19 in the economy. This there are alerts also of flood this year in some areas. Assam is already suffering due to flood in the area. Let’s hope for the best. There is possibility of easing out the tension at the Indo-China border in the region of Ladhakh at least. This week Indian stock market is ready for big swings or not, after reporting of 20k Covid cases in single day. Total number is above 528000 cases by now. There in US virus surge report pushed the US markets down on Friday the last trading day of the week, whereas Indian prime index Nifty 50 managed to close little higher. Let’s check the support and resistance levels for the month of July this year:
