Greatest Miracle of 2020

We will be talking about the story of the most fascinating stock of this year. The stock was relisted on 27th January, 2020 just with a price of 16.5 and after around just 5 months trading at 1176 on Friday. Its peak value for the year is 1519.65, that’s approx 91 times the listed prices. The king of multibagger of the year. It is none other than Ruchi Soya. To get more clarity about the stock. Let’s deep dive into its past.

Ruchi Soya is one of the largest FMCG company in the palm oil. It processes the crude palm oil to edible one. You might have heard the brand name like Nutrela, Mahakosh, Sunrich. That’s all Ruchi Soya. It made huge losses to change in the export duty and it couldn’t recover the credits provided to their customers. They provided credit in the firsthand to boost their sales. It had loans from the major PSU bank of the country like SBI, PNB and more. The banks pulled it to the bankruptcy court to recover their losses. However, there was a twist. The company agreed to sell its business to another FMCG. It was acquired by India’s leading ayurvedic FMCG, Patanjali. It agreed to pay the half the dues(around 4,000 crore) and half were written of by the banks. It ended up acquiring 99% of the company. However, they didn’t have such a huge amount to pay off. They arranged 1,000 crore of their and rest was taken as loan from the banks. Isn’t it puzzling? Loans to pay off the loans. The company pledged 99% of its newly acquired share as collateral. That means only 1% of the total shares is trading on the open market. There is a high probability that the buyers and sellers may be doing false play, acting in unison, just to create an environment of FOMO. Don’t you fill like you missed the opportunity to make quick money? That’s how the retail investors end up losing money.

There may be many more companies just like Ruchi Soya where Mr. Market is just pushing the prices higher without any rationale. Be conscious enough to be aware about your biases, since you are investing your hard earned money just to make quick gains but may eventually end up losing the entire funds.