IdeaForge Technology, India’s top drone manufacturer, had a remarkable market debut as its shares were listed at a considerable premium on both the NSE and BSE. At first, analysts suggested subscribing to the IPO but are now recommending booking profits due to the steep listing price. The company’s IPO received an overwhelming response from investors, indicating a successful entry into the market.
In a remarkable turn of events, IdeaForge Technology, India’s leading drone manufacturer, experienced a dazzling market debut on Friday (July 7). The company’s shares debuted at Rs 1,300 on the National Stock Exchange (NSE), a staggering 93 percent premium of Rs 628 over the issue price of Rs 672. On the Bombay Stock Exchange (BSE), the stock opened at Rs 1,305.10, an impressive 94.21 percent increase compared to the offer price.
Interestingly, just a day before the listing, IdeaForge shares were already commanding a premium of around Rs 518 in the unlisted market, indicating a potential upside of 77 percent for investors. However, the listing price surpassed expectations, providing a pleasant surprise to investors on its first day of trading.
Analysts had given the issue favorable reviews, suggesting investors “subscribe” to the IPO for both short-term gains and long-term prospects. They highlighted the company’s niche market position, strong client relationships, and attractive valuations. However, in light of the high listing price, analysts now advise investors to capitalize on their gains and exit their positions, as they believe the shares are becoming overvalued.
Anubhuti Mishra, an Equity Research Analyst at Swastika Investmart, recommended booking profits and exiting positions, emphasizing that the stock is already trading at a significant premium. Mishra also highlighted certain business-related risks associated with the company. However, she mentioned that more aggressive investors could still hold the stock with a stop loss at 1170.
Mehta Equities suggested that if the market remains optimistic and provides listing gains of over 70 percent, allotted investors should book profits on the listing day. Riskier investors with a speculative mindset could consider holding the shares for a medium to long-term to capitalize on the growing demand for drones.
The Rs 567-crore IPO received an overwhelming response from investors during the four-day bidding process from June 26-30, with an overall subscription of 106.06 times. This IPO marked the first instance since December 2021 where bids exceeded 100 times.
Qualified institutional bidders (QIBs) oversubscribed the category a staggering 125.81 times, while non-institutional bidders (NIIs) subscribed 80.58 times. The portion reserved for retail investors was subscribed 85.20 times, and the employees’ portion received 96.65 times the bids.
Prior to the IPO, IdeaForge had already raised Rs 182 crore from 14 anchor investors, with the company allocating 63.84 lakh equity shares at Rs 285 per share to these investors.
The public offer comprised a fresh issue of Rs 240 crore and an offer for sale of 48.69 lakh equity shares by existing shareholders. Ashish Bhat planned to sell 1.58 lakh shares, Amarpreet Singh intended to sell 8,362 shares, and Nambirajan Seshadri planned to sell 22,600 shares. Other selling shareholders included A&E Investment LLC, Agarwal Trademart Pvt Ltd, and Celesta Capital II Mauritius, among others.
The proceeds from the offer for sale will go to the selling shareholders, while the net proceeds from the fresh issue will be used to repay debts (Rs 50 crore), bridge the working capital gap (Rs 135 crore), invest in product development (Rs 40 crore), and cater to general corporate purposes.
IdeaForge enjoys support from prominent backers such as Infosys, Qualcomm, Celesta, Florintree, EXIM Bank, Indusage Technology Venture Fund, and Infina Finance. Motilal Oswal Investment Advisors served as the sole book-running lead manager, while KFin Technologies acted as the registrar to the issue.
