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  • Writer's pictureJatin Agarwal

IdeaForge IPO

Updated: Jun 28, 2023


Company and IPO Overview:


Established in 2007, IdeaForge Technology Limited is renowned as India's largest manufacturer of drones, unmanned aircraft systems. The company specializes in developing cost-effective and user-friendly unmanned aircraft systems for various applications, including research, development, production, and operation.


With a core focus on technological advancement in the UAV field, IdeaForge India primary objective is to produce top-quality surveillance and mapping equipment. IdeaForge's drones find extensive utilization in industries such as construction, real estate, defense forces, and mining, offering significant benefits.


Notably, the company currently holds around 50% of the UAV market share in India and achieved the 7th global ranking in December 2022 among dual-use category drone manufacturers.


Additionally, IdeaForge Technology Limited offers two key software solutions:

1. BlueFire Live: Live enables secure live streaming of UAV video.

2. BlueFire Touch: This software commands mapping and surveillance missions efficiently.


It is also the first company to participate in the demonstration of 5G enabled UAVs at the Indian Mobile Congress in 2018. An early prototype of its VTOL UAV (quadrotor helicopter) was also featured in a popular Bollywood movie in 2009.


It is one of the few original equipment manufacturers globally to have its own proprietary autopilot sub-system and ground control software. As a result of its continuous product development and innovation efforts, it has filed 62 patent applications, which comprise of 34 applications filed internationally and 28 patent applications filed in India, as on February 8, 2023. A validation of its product competency and an example of global acceptance of its product was when its product SWITCH UAV, according to the 1 Lattice Report, won the largest mini-VTOL UAV contract in March 2022, against global competitors from Russia, Israel, France, Ukraine and other countries.


IdeaForge Technology Limited is a new mainboard IPO coming and it is going to raise around ₹ 567 crores via IPO that comprises Offer For Sale (OFS) up to ₹ 327 crores and fresh issue upto ₹240 crores. The retail quota is 10%, QIB is 75%, and HNI is 15%. The price band of the issue is ₹638 to ₹672 with a minimum market lot of 22 shares. Moreover the company is ready to give an employee discount of Rs. 32 per share.


Financials (rounded off):

Date

Total Revenue (₹ in cr)

​​​PAT (₹ in cr)

​31/03/2021

36

(14.6)

31/03/2022

161

44

31/03/2023

196

32


Objectives of the Issue:


The purpose of raising funds through this IPO is to:

1. Channelize funds to accomplish various goals, including debt repayment and investment in product development.

2. Meet working capital requirements.

3. Address general corporate needs.


IPO Details:

IPO Date

26/06/2023-29/06/2023

Face Value

₹10 per share

IPO Price Band

₹638-₹672 per share

IPO Lot Size

22 Shares

Listing at

NSE, BSE

Basis of Allotment

04/07/2023

Credit of Shares in Demat

06/07/2023

Listing Date

07/07/2023

Pre-Issue Shareholding

33.37%

Post-Issue Shareholding

-

Retail Minimum Lot Size

22 shares (₹14,784)


Valuations & Margins:

Indicators

FY 21

FY 22

FY 23

EPS

(5.03)

13.13

8.12

P/E

-

-

78.57-82.76

EBITDA (%)

(26.65)

47.12

30.91

Debt/Equity

0.77

(0.09)

0.27

ROCE (%)

(15.18)

49.63

12.51


Important things to note about the Company:


Top reasons to consider the IPO:


1. The company is a pioneer and the pre-eminent market leader in the Indian Unmanned Aircraft Systems (UAS) market. As a result of this first-mover advantage, IdeaForge Technology is one of the few Indian businesses to enter the Unmanned Aerial Vehicle (UAV) market.


2. It is also the first organization to manufacture VTOL UAVs in India in 2009, which is an aircraft that can depart, hover and land vertically. These VTOL drones can even maintain stable flight in harsh weather conditions which would be of great use in the defence industry.


3. The company's revenue from operations has risen at a CAGR of 237.48% over the last three fiscal years, with a Return on Capital Employed of 49.63% in Fiscal 2022.


4. The company has an in-house design that focuses on performance, dependability, and autonomy. This extensive in-house manufacturing facility contributes to the company's increased efficiency.


5. Above all, if we see the Indian drone market, there is a vast growth opportunity in various sectors like agriculture, mining, defence, and many more. This could be a hint of the company's future growth potential.


Risk factors to watch out in the IPO:


1. The company has a large working capital shortfall. As a result, if the company is unable to raise additional funds in the future, it will have a negative influence on its operations.


2. The company is highly dependent on global vendors for the supply of components and raw materials. Hence, if any difficulties arise in the import of raw materials, it would lead to delays in manufacturing and the subsequent processes. This delay may harm the business in the long run.


3. The business is reliant on a single production plant. As a result, any failure at the facility would directly disrupt the company's manufacturing schedule as well as its financials in the long run.


4. In addition to the reasons raised above, fluctuations in exchange rates may have a considerable impact on the company's manufacturing costs because the majority of its components are imported from other countries.


Crisp Insights:

  • Current Grey Market Premium is 80%-100%.

  • In the rapidly growing drone sector, IdeaForge Technology Limited has successfully positioned itself as a dominant player, securing an impressive 50% market share.

  • Given the momentum and interest in this sector, the IPO looks fairly priced, however, if you look closely, the business is majorly dependent on Defense contracts and similar companies in related businesses (as there is no direct comparison available) are valued better in terms of P/E multiple.



Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.


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