IdeaForge IPO closes today, oversubscribed 53.63 times

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IdeaForge IPO closes today, oversubscribed 53.63 times

The maiden initial public offering (IPO) of IdeaForge Technology has garnered significant interest from investors, with the offer receiving bids for 24.93 crore equity shares, surpassing the IPO size of 0.46 crore shares. The final day of bidding, June 30, witnessed a remarkable oversubscription of 53.63 times.

To accommodate the high demand, the Securities and Exchange Board of India (SEBI) extended the subscription period by one day, allowing investors to submit their bids until June 30. The IPO had opened on June 26, following the market closure on June 29.

Retail investors, who hold a 10 percent reservation in the issue size, have oversubscribed their portion by a significant margin, reaching 70.54 times. Employees of IdeaForge also exhibited strong interest, bidding 75.19 times the allotted quota of shares.

A total of 13,112 equity shares have been reserved for the company’s employees, who will acquire these shares at a discounted price of Rs 32 per share compared to the final issue price.

High net worth individuals (HNIs) displayed a notable response to the IPO, with the portion reserved for them oversubscribed by 68.51 times. Qualified institutional buyers also demonstrated considerable interest, subscribing 40.45 times the allocated quota.

The IPO allocation reserves 75 percent for qualified institutional buyers and 15 percent for high net worth individuals (non-institutional investors).

During the preceding three days, the issue had already witnessed an impressive oversubscription of 50.3 times.

The IPO comprises a fresh issuance of shares worth Rs 240 crore, alongside an offer for sale of 48.69 lakh shares by existing shareholders. While the selling shareholders will receive the proceeds from the offer for sale, the company will receive the fresh issue money. The primary objectives behind the fresh issue include debt repayment, fulfilling working capital requirements, and investing in product development.

The price band for the IPO offer ranges from Rs 638 to Rs 672 per share.

IdeaForge specializes in the manufacturing of unmanned aircraft vehicles used for mapping, security, and surveillance purposes. These drones have a wide range of applications in areas such as mining, planning, and mapping.

Marwadi Financial Services, which has assigned a “subscribe” rating, stated, “The company is a pioneer and the leading player in the Indian UAS industry, benefitting from its first-mover advantage and strong relationships with a diverse customer base. Additionally, considering the company’s future growth potential, it is available at a reasonable valuation.”

With a 50 percent market share in the Indian unmanned aircraft systems (UAS) market, IdeaForge has experienced remarkable revenue growth in the past, supported by a favorable business environment, increased orders, and government initiatives like the PLI scheme for drones.

However, certain risks need to be considered. Swastika Investmart highlighted, “IdeaForge heavily relies on government-aided projects, which poses a significant risk due to its dependence on a single source of revenue. Furthermore, the entry of major players like the Adani Group, through joint ventures with foreign drone companies, adds further competition.”

Moreover, Swastika Investmart expressed concerns regarding IdeaForge’s lack of long-term contracts and reliance on established relationships for securing deals, emphasizing that this could be a potential vulnerability for the company.

Given the opportunities and risks associated with IdeaForge, Swastika Investmart recommends the IPO for aggressive investors.

About IdeaForge:

IdeaForge unmanned aerial vehicles (UAVs) possess the capacity to assist defense forces in conducting Intelligence, Surveillance, and Reconnaissance (ISR) operations for border security, coastal protection, and surveillance purposes. Additionally, IdeaForge UAVs can play a vital role in performing maritime Intelligence, Surveillance, and Reconnaissance (ISR) operations, thereby aiding in crime control endeavors.

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