The unstoppable rally in the shares of Ruchi Soya Industries, which Baba Ramdev’s Patanjali Group acquired last year in a bankruptcy sale, has made the edible oil maker one of the top 60 companies on Dalal Street in terms of market capitalisation.

After getting relisted on January 27, the stock has soared 8,818 per cent to close at Rs 1,507 on Friday. This has raised the company’s market value to Rs 44,600 crore from Rs 500 crore in just 103 sessions. On Monday, the stock declined 5 per cent to Rs 1,431.95 post March quarter earnings.

In terms of market-cap, Ruchi Soya is now bigger than several biggies like Lupin, Torrent Pharma, Tata Steel, Ambuja Cements, HPCL, Grasim, Punjab National Bank, Hindalco, UPL, Colgate-Palmolive and Havells India.

But analysts have since turned cautious on the stock. They feel Sebi should take note and probe what is driving the ongoing rally on the counter. They said the market regulator should ask the company when it is planning to meet the minimum public shareholding norms of 25 per cent.

What’s driving the breakneck rally?

The stock hit its 5 per cent lower circuit for six successive sessions this May, and has been hitting upper circuits since its relisting. Earlier, shares of the company had been delisted at Rs 3.32 in November, 2019.

Kolkata-based investor Arun Mukherjee said low free float of shares of the company is the main reason behind the sharp rally. “Nothing is related to fundamentals. It is a perfect example of demand-supply dynamics,” he said.

The promoters held 99.03 per cent stake in the company as of March 31, 2020.

“Retail investors currently own less than 1 per cent in the company. I think Sebi should take note and put the scrip in the T2T segment. Retail investors should not be allowed to buy such shares,” he said.

Trade-to-trade (T2T) is the segment where one compulsorily take delivery for every trade, and cannot square off intraday.

Out of the company’s 29.58 crore outstanding shares, Patanjali Group holds 98.87 per cent and public shareholders the remaining 33.4 lakhs.

Should Sebi have a look at it?

Independent market analyst Ambareesh Baliga seconded Mukherjee’s view. “Low free float is the primary reason for the surge in the shares of Ruchi Soya. Sebi should do some investigation and try to identify who are the buyers and why are they acquiring these shares,” he added.

The company on Friday posted a net loss of Rs 41.24 crore for the quarter ended March 31 against a net profit of Rs 32.10 crore posted for the corresponding quarter last year. Net sales came in at Rs 3,190.96 crore, up 1.42 per cent from Rs. 3,146.33 crore in March quarter of 2019.

In December quarter, profit before exceptional items and tax grew 24 times to Rs 151 crore from Rs 6.29 crore in the year-ago period, even as revenues grew 7 per cent to Rs 3,713 crore from Rs 3,474 crore.

“As a shareholder, investors suffered huge loss, as 100 shares were considered as 1 at the time of relisting. Sebi should investigate why promoters are holding 99 per cent stake even after five months of relisting,” said Arun Kejriwal, Director at Mumbai-based investment advisory firm Kris.

“Sebi should not give more time to the company for any offer for sale. To protect investors, there is a need to get clarity over promoters’ next step,” Kejriwal said.

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