ideaForge Technology IPO: Issue subscribed 13.27 times on Day 2 so far; GMP zooms over 81%

The Rs 567 crore-initial public offering (IPO) of ideaForge Technology continued to receive stellar response on Tuesday. The drone manufacturer's initial share sale was subscribed 13.27 times so far of the second day of bidding. The company has announced to sell its shares in the fixed price band of Rs 638-672 apiece. The IPO received 6,16,78,386 today against the issue size of 46,48,870 shares. The three-day initial share sale would now close tomorrow, (June 28), due to shifting of market holiday to June 29.

As of 5 pm, the retail individual investors, employee reserved and non-institutional investor (NII) categories were subscribed 36.36 times, 26.26 times and 21.59 times, respectively. The qualified institutional buyer (QIB) portion was booked 1.34 times.

The issue includes issuance of fresh equity shares worth Rs 240 crore and an offer for sale (OFS) of 4,869,712 equity shares amounting to Rs 326.44 crore by promoters and existing shareholders. Investors can make a bid of a minimum of 22 equity shares and its multiples thereafter.

The company has reserved 13,112 shares in the public issue for its employees, who will get a discount of Rs 32 apiece for the issue. 75 per cent of the net offer is reserved for QIB, while NIIs will get 15 per cent of the offer. Retail bidders would be allocated with the remaining 10 per cent of the offer.

Ahead of its IPO, ideaForge raised Rs 254.88 crore from 31 anchor investors by allocation of 37.92 lakh equity shares at Rs 672 per share which saw participation from marquee investors including Nomura, Invesco, HSBC, Goldman Sachs among others.

Latest grey market premium

Market participants said Fusion Micro Finance IPO's grey market premium (GMP) was last heard between Rs 540 and Rs 545. Considering the higher GMP of Rs 545, the grey market is expecting the drone maker to list around Rs 1,217 (Rs 672 + Rs 545), which is 81.10 per cent higher than the IPO's upper band price of Rs 672 per equity share.

"The issue is priced at approximately 87.61 times based on the FY23 financials. Despite its high cost, IdeaForge IPO may attract significant subscription due to the company's dominance and the favorable momentum in the primary markets. GMP was last heard at Rs 545," Manan Doshi, UnlistedArena.com, told Business Today.

As of fiscal 2023, the company has the largest operational deployment of indigenous UAVs (unmanned aerial vehicles) across India with an Ideaforge-manufactured drone taking off every five minutes -- on average -- for surveillance and mapping, said, Manish Khanna, Co-Founder at Unlisted Assets. Khanna suggested a GMP of Rs 540.

Net proceeds from the fresh issue would be utilized towards repayment or prepayment of certain debt availed by the company, funding working capital requirements, investment in product development and general corporate purposes.

A majority of the brokerages are positive on the issue citing the rising demand of drones, niche business model and positive outlook for the sector. However, a few have a word of caution for the issue citing its expensive valuations, lack of long-term contracts and high competition in the industry.

JM Financial and IIFL Securities are the book-running lead managers to the issue, while Link InTime India has been appointed as the registrar. Shares of ideaForge Tech would be listed on both BSE and NSE, likely on July 7.

Incorporated in 2007, ideaForge Technology is engaged in the business of manufacturing unmanned aircraft systems (UAS) for mapping, security and surveillance. These drones are capable of a wide range of mining area planning, and mapping applications. ideaForge UAVs help construction and real estate boost their operations.

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