ideaForge Technology IPO: Infosys to make 6x gains in drone maker on listing. Here's how

As ideaForge Technology hit the market with its initial public offer (IPO) on June 26, Infosys would eye a multi-fold jump in value of its investment in the drone maker. While the second largest IT major is not among selling shareholders in the Rs 566 crore issue, the notional value of its investments in the company would jump roughly 6.3 times in a span of six-and-a-half years since it first invested in the company.

Infosys had in December 2016 announced an investment from its Innovation Fund in ideaForge, the Indian start-up focused on Unmanned Aerial Vehicle (UAV) solutions. Infosys owned 16,47,314 shares or 4.35 per cent stake in the company, as per the red herring prospectus. The drone maker has set the price band of the issue at Rs 638-672 apiece.

On June 14 this year, ideaForge Technology converted Series A CCPS held by Infosys into 1,220,852 shares at an issue price of Rs 80.73 (adjusted of bonus) while the drone maker converted Series B CCPS held by Infosys into 4,03,862 shares at Rs 185.71. CCPS stands for compulsorily convertible preference shares.

The acquisition price for about 1,62,47,14 shares comes in at Rs 17.35 crore for Infosys. At the upper limit of the IPO price band, the 1.62 lakh shares would be worth Rs 110.15 crore, thus hinting at 6.34 times notional gains.

ideaForge was ranked seventh globally in the dual-use category (civil and defence) drone manufacturers as of December 2022. It has grown at a CAGR of 137.47 per cent in terms of revenue from operations in the past three financial years, with a return on capital employed (ROCE) of 12.51 per cent in FY23. It has a broad range of products with feature-based differentiation such as weight class (approximately 2-7 kg), endurance class (25-120 minutes flying time), take-off altitude range (up to 6,000 meters), communication range (approximately 2-15 km), payload types, etc.

The IPO is being floated to repay debt of Rs 50 crore. In addition to this, around Rs 135 crore will be utilised towards funding working capital requirements and Rs 40 crore towards investment in product development. The IPO consists of a fresh Issue of equity shares up to Rs 240 crore and an offer for sale of 4,869,712 equity shares.

Also read: Alok Industries shares jump 8% amid high volume; stock of RIL-promoted firm up 44% in 30 days

Also read: Multibagger stock: As shares zoom 2,600% in 7 months, Remedium Lifecare may announce split, bonus on Friday