Unmanned aircraft systems (UAS) maker, Ideaforge Technology, experienced a highly successful listing on July 7 with the stock opening at an impressive 94 percent premium, marking the highest premium among companies listed in 2023.
The shares began trading at Rs 1,300 on the National Stock Exchange (NSE), surpassing the issue price of Rs 672. The opening price on the BSE was Rs 1,305.10.
The listing price aligned with analysts’ expectations, who anticipated a premium in the range of 50-75 percent. This was attributed to the robust subscription to the initial public offering, Ideaforge’s first-mover advantage, the promising outlook of the defence industry, and its strong product portfolio, commanding a 50 percent market share in the domestic drone industry. The grey market trading premium was around 75 percent.
The favourable conditions in the equity market also bolstered participants’ confidence. The BSE Sensex and Nifty had rallied 15 percent and 16 percent, respectively, since the March lows, reaching new record highs.
The public offering by Ideaforge was oversubscribed by 106.6 times, with qualified institutional investors subscribing 125.81 times, retail investors 85.20 times, and high net-worth individuals 80.58 times their allotted quotas during the period from June 26 to June 30.
Prashanth Tapse, a research analyst at Mehta Equities, who had predicted a strong listing gain, believes that the Ideaforge offer provided a great opportunity for investors to participate in one of the pioneers and market leaders in the Indian UAS or drone market. The company’s first-mover advantage drives growth through a self-propagating flywheel.
Through the IPO, Ideaforge raised a total of Rs 567 crore, including a fresh issue of Rs 240 crore. The offer for sale portion accounted for over Rs 320 crore.
Ideaforge specializes in manufacturing unmanned aircraft vehicles for mapping, security, and surveillance purposes. These drones have a wide range of applications in mining area planning, mapping, and boosting operations for companies in the construction and real estate sectors, as well as supporting defence forces in intelligence, surveillance, and reconnaissance (ISR) operations along borders.
As of May 2023, Ideaforge served 265 customers, including central armed police forces, state police departments, disaster management forces, forest departments, and private contractors involved in the Smart Cities project. The company had an order book worth Rs 192.3 crore as of March 2023.
Investors supporting Ideaforge include Infosys, Qualcomm Asia Pacific, Celesta Capital II Mauritius, Celesta Capital II-B Mauritius, Florintree Enterprise LLP, Export-Import Bank of India, and Infina Finance.