The IPO of India's leading drone maker, Ideaforge, has witnessed a remarkable start with robust demand from retail investors. Within hours of opening, the issue has been subscribed 1.75 times, with the retail portion getting fully subscribed in less than an hour.
While the Non-Institutional Investor (NII) part has been subscribed 1.89 times, there have been no bids from qualified institutional buyers. Market sources indicate that the company's shares are commanding a premium of Rs 525-530 in the unlisted market, signaling the potential for significant listing gains if the current trends persist.
The Grey Market Premium (GMP) for Ideaforge stands at nearly 80% higher than the upper end of the offer price at Rs 672. It is important to note that grey market premiums serve as an indicator of the company's shares' performance in the unlisted market and are subject to rapid changes.
The initial public offering (IPO) comprises a new issuance of equity shares valued at a maximum of Rs 240 crore, along with an offer for sale (OFS) of up to 48.6 lakh shares by existing shareholders who are selling their stake.
Brokerages have shared their opinions on the IPO:
Swastika Investmart highlights the company's impressive revenue growth CAGR of 237.48% between FY20-22. However, it cautions about IdeaForge's heavy reliance on government-aided projects, which poses a significant risk due to dependence on a single source of revenue. For aggressive investors, they assign a subscription rating considering both the opportunities and risks.
Hem Securities emphasizes IdeaForge's in-house design-to-delivery capabilities and strong management, demonstrating the ability to deliver robust financial performance. They recommend subscribing to the issue as an attractive investment opportunity.
HDFC Securities lists four key strengths of the company, including being a first-mover in the UAS market, a diversified product portfolio with a robust technology stack, in-house design-to-delivery capabilities, and strong management. They see these factors favorably for the IPO.
SBI Securities points out that at the upper price band, the business is trading at a P/E multiple of 87.5x FY23 EPS. They anticipate the company attracting a scarcity premium due to its unique growth story in the drone industry. Investors with a long-term horizon can subscribe to the IPO, with potential listing gains attributed to a smaller issue size and likely scarcity premium.
Reliance Securities considers the healthy business prospects, indigenous design and technological capabilities, diversified product portfolio, ability to offer customer-centric solutions, and the immense potential of the drone industry itself. They recommend subscribing to the issue.
As Ideaforge's IPO continues to gain momentum, the market anticipates an exciting future for the company, driven by its innovative offerings in the thriving drone industry. Investors are closely watching the developments and considering the opportunities presented by this IPO.