Introduction:
Each time a new Initial Public Offering (IPO) is introduced to the market, it generates considerable excitement among investors. It allows them to become shareholders in a growing company and potentially earn long-term profits. Nevertheless, it's important to note that not all IPOs are guaranteed to deliver equal returns. That's why it is crucial to assess various factors before investing in an IPO.
Mark your calendars for the ideaForge Technology IPO, set to be open for subscription from June 26 onwards. Continue reading to evaluate whether it holds potential as a worthy investment opportunity for you.
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About the Company:
Incorporated in 2007, ideaForge Technology Limited is a leading manufacturer and supplier of Unmanned Aircraft Vehicles (UAVs) or “drones”. These devices are used in the construction and real estate sector and also assist defense personnel in Intelligence, Surveillance, and Reconnaissance (operations) along national borders.
ideaForge Technology Limited has a strong foothold in the Indian market, with a market share of nearly 50% in terms of revenues during the fiscal year 2022. The company’s product portfolio comprises hardware components used for the construction of drones, including payloads, batteries, chargers, and communication chips. It also develops software that helps in controlling and managing UAVs remotely.
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Key Strengths:
Below are the key strengths of the company:
- A pioneer and market leader in the Indian drone market
- A diversified range of products equipped with robust technology
- An excellent track record of assisting defense forces in successful missions
- Boasts a diverse and well-established customer base of 265 clients
- Excellent product development capabilities across hardware and software components
- A separate in-house team to handle deliveries and shipping
- Strong management team with a track record of meaty financial performances
Key Risks:
Below are the weaknesses or risks associated with the company:
- Dependence on global vendors for supply of raw materials
- Only a single manufacturing facility in Navi Mumbai, Maharashtra
- Works in a highly-related industry that is subject to frequent changes
- Requires multiple licenses and government approvals to operate
- Products are prone to hacking or other forms of cyber attacks
Financial Snapshot:
ideaForge Technology Limited has shown pretty strong financial growth in the last three years. After reporting a net loss in FY 2021, the company made profits of Rs. 440 crores and Rs. 320 during FY 2022 and FY 2023 respectively. The net worth of the company has grown astoundingly from Rs. 597 crores in FY 2021 to Rs. 3247 crores in FY 2023.
The company’s revenues have also shown commendable growth, testifying to its growing market share and prowess. The company has been able to produce requirement-specific products for its clients which has further bolstered its financial strength.
The table below depicts the company’s financials as per the Drafter Red Herring Prospectus (DRHP) filed with the market regulator:
Amount in Rs. millions except per share
ideaForge Technology IPO Details:
Through its IPO comprising a fresh issue worth Rs. 240 crores and an offer for sale worth Rs. 327 crores, ideaForge Technology Ltd. plans to raise Rs. 567 crores. 75% of the offer is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and the remaining 10% for retail investors.
ideaForge Technology IPO will open for subscription on June 26 and close on June 29. The price band for the IPO has been fixed between Rs. 638 and Rs. 672 by the company. Investors can place bids for multiple lots of 22 shares, each with a minimum investment value of Rs. 14,036. The allotment of shares will be finalised through a lottery on July 4, and the shares will get listed on the stock exchanges on July 7.
With the money raised from the IPO, the company plans to:
- Repay certain debts
- Fulfill working capital requirements
- Invest in product development
- Carry out general corporate works
What Should You Check Before Buying?
India’s UAV industry has grown by 60% in FY 2022 as compared to the previous financial year. The market size is estimated at 15.40 billion USD in 2023 and is expected to grow at a Compound Annual Growth Rate (CAGR) of 14.01% in the next five years. ideaForge Technology Limited – a market leader in the industry – is poised to play a significant role in this estimated growth.
As an investor, you can subscribe to ideaForge Technology IPO with a long-term prospect. If you want to subscribe for listing gains, careful analysis of prevailing market conditions and Grey Market Premium (GMP) should influence your decision.
If you need to open a Demat account to invest in the IPO, you can turn to Motilal Oswal and Get latest update on Upcoming IPO 2023!
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