"IdeaForge IPO: GMP Soars Nearly 80% as Issue Gets Fully Subscribed - Here's What Brokerages Say"

 

"IdeaForge IPO: GMP Soars Nearly 80% as Issue Gets Fully Subscribed "

Here's What Brokerages Say

IdeaForge, India's leading drone maker, has seen a surge in demand for its shares as its initial public offering (IPO) gets fully subscribed. The IPO opened on a strong note and was subscribed 1.75 times on the first day, with the retail portion getting fully subscribed in less than an hour of opening. The NII (non-institutional investors) part was subscribed 1.89 times so far, while there were no bids from qualified institutional buyers.

According to market sources, the company's shares are commanding a premium of Rs 525-530 in the unlisted market, indicating big listing gains for investors if the trends sustain. The current grey market premium (GMP) is nearly 80% higher compared to the upper end of the offer price at Rs 672. However, it is important to note that grey market premiums are just an indicator of how the company's shares are stacked up in the unlisted market and are subject to change rapidly.

The IPO comprises a fresh issue of equity shares of up to Rs 240 crore and an offer for sale (OFS) of up to 48.6 lakh shares by selling shareholders. The company has experienced remarkable revenue growth CAGR of 237.48% between FY20-22. However, IdeaForge heavily relies on government-aided projects, which poses a significant risk due to its dependence on a single source of revenue.

Here's what brokerages have to say about the IPO:

Swastika Investmart: The brokerage assigns a subscription rating for aggressive investors, considering both the opportunities and risks.

Hem Securities: The company’s in-house design to delivery capabilities and strong management with a demonstrated ability to deliver robust financial performance makes the issue an attractive destination to deploy funds in. Hence, they recommend subscribing to the issue.

HDFC Securities: The brokerage has listed four key strengths of the company, including first-mover advantage in the UAS market, diversified product portfolio with a robust technology stack, in-house design to delivery capabilities, and also backed strong management.

SBI Securities: The company is likely to attract the scarcity premium and will continue to trade at expensive valuations. Investors can subscribe to the IPO with a long-term investment horizon. Listing gains are likely due to smaller issue size and likely scarcity premium.

Reliance Securities: Considering the healthy business prospects, indigenous design and technological capabilities, diversified product portfolio, ability to deliver customer-centric offerings, and huge potential for the drone industry itself, they recommend subscribing to the issue.

It is important to note that the recommendations, suggestions, views, and opinions given by the experts are their own and do not represent the views of The Economic Times.

In conclusion, IdeaForge's IPO has received a positive response from investors, and market experts believe that the company has strong growth potential. However, investors should carefully consider the risks associated with the company's dependence on government-aided projects before investing in the IPO.