ideaForge IPO opens for subscription today, GMP soars 70%; should you subscribe?

Posted By: Shweta Khandal

Posted On: June 26, 2023


Today, on 26 June, ideaForge is offering its IPO for people to subscribe to. The IPO includes new shares worth Rs 240 crore and existing shares that the promoters are selling, totalling 48.7 lakh shares.

The price range for each share in the IPO is between Rs 638 and Rs 672. The shares of ideaForge were in high demand in the unofficial market, and their price was 70% higher than the IPO price.

This suggests that the shares might be listed at a higher price of Rs 1,147 per share.

The amount of new shares in the IPO has been reduced to Rs 240 crore from Rs 300 crore because ideaForge already raised Rs 60 crore by selling 8.92 lakh shares to institutional investors before the IPO.

The IPO will be open for subscription until 29 June. The units will be allocated on 4 July, and the shares are expected to be listed on the stock market on 7 July.

ideaForge is a company that makes unmanned aircraft vehicles (UAVs) used for mapping, security, and surveillance purposes. These drones are helpful in various industries such as mining, construction, real estate, and defence.

They assist in tasks like planning mining areas, creating maps, and boosting operations in construction and real estate. Additionally, they are used by defence forces for intelligence gathering, surveillance, and reconnaissance activities along borders.

Should you apply for the IdeaForge IPO?

Mehta Equities: Subscribe for listing gains

The ideaForge IPO offers investors a chance to invest in a pioneering and leading company in the Indian drone market. They have a strong position in the market and were one of the first to enter. They have a unique advantage that helps them grow continuously.

They offer a wide range of products with different features, which sets them apart from others. They are also one of the few companies globally that provide a complete solution for unmanned aircraft, including software, firmware, and good after-sales support.

At the highest price of Rs. 672 per share, the IPO values the company at Rs. 2,800 crores. Based on their earnings for the financial year 2023, the price-to-earnings ratio (P/E) stands at 87x.

This means that the IPO is priced a bit high, and it’s difficult to find similar companies in the drone market to compare with.

However, due to the increasing demand for drones and the company’s recent performance, there is a good chance that the IPO will have a successful listing and provide gains for investors.

Therefore, we recommend considering subscribing to the IPO mainly for potential listing gains.

Motilal Oswal: Subscribe

ideaForge offers a wide range of products that are highly regarded in both civil and defence applications. Their revenue has increased by more than five times from FY21 to FY23, reaching Rs 1.9 billion.

They have also made a profit in the past two years, with a profit of Rs 320 million in FY23. Based on this positive trend, we recommend subscribing to ideaForge.

Moreover, considering the current strong market conditions and the high interest in defence stocks, there is a possibility of gaining profits when the company gets listed on the stock market.

Dilip Davda: May subscribe

If we look at the earnings of FY23 and consider the fully diluted equity capital after the IPO, the price-to-earnings ratio (P/E) is 87.50. This means that the issue price is set at a very high level compared to the earnings.

The pricing seems to be asking for a fancy premium, especially because of the excitement surrounding the drone industry. ideaForge is the leading company in the Indian unmanned aircraft systems (UAS) market.

While the company has shown growth in its revenue, its profits for FY23 declined due to the impact of employee stock ownership plans (ESOPs).

Although the IPO seems to be aggressively priced based on the performance of FY23, investors who are well-informed and have surplus funds may consider investing for long-term benefits.

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