This stock zoomed over 40% in two trading sessions; do you own it?

Shares of Ruchi Soya have delivered over 40 per cent returns in just two trading sessions. The stock rose 18 per cent to hit an intraday high of Rs 1,139.95 on the BSE on Tuesday.

On Monday, the stock zoomed 20 per cent in early trade after the board of the edible oil major approved the red-herring prospectus (RHP) for its follow-on public offer (FPO) of around Rs 4,300 crore. The issue will open on March 24 and close on March 28, 2022, the company said.

"Pursuant to the approval accorded by the Board of Directors of the company ("Board") at its meeting held on March 10, 2022, read along with the approval accorded by the Issue Committee, a committee of the Board, has passed resolution by circulation on March 11, 2022," Ruchi Soya said.

Long-term investors have made big gains by investing in this stock as it has surged over 14,000 per cent in the last three years. With a market capitalisation of more than Rs 32,000 crore, the shares stand higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

The dilution through the FPO would help Baba Ramdev-led Patanjali Ayurveda, which owns Ruchi Soya, to adhere to the minimum shareholding norms. In August 2021, the firm had received capital markets regulator Sebi's go-ahead to launch the FPO. It had filed the draft red herring prospectus (DRHP) in June 2021.

Ruchi Soya will utilise the entire issue proceeds for furthering the company's business by repayment of certain outstanding loans, meeting its incremental working capital requirements and other general corporate purposes.

According to MarketsMojo, the company has a low ability to service debt as it has a high debt to EBITDA ratio. Also, the stock is technically in a ‘Mildly Bearish’ range now.