Ideaforge IPO opens today: 10 key things to know before you buy

Aircraft systems maker Ideaforge Technology is the first public issue opening for subscription this week. The net proceeds from the fresh issue will be used for repaying debt (Rs 50 crore), funding the working capital gap (Rs 135 crore) and investing in product development (Rs 40 crore) besides general corporate purposes, the company has said.

Here are 10 key things to know before you buy the offer:

1) IPO Dates

The bidding for maiden public issue starts on June 26. The offer will close on June 29.

2) Price Band

The leading drone manufacturer has set the issue price band at Rs 638-672 per share.

3) Offer Size

The company is planning to mop up Rs 567 crore through the IPO at the upper end of the price band. The offer comprises fresh issuance of shares worth Rs 240 crore and an offer-for-sale of 48.69 lakh equity shares by promoter and investors.

Ashish Bhat, Amarpreet Singh, Nambirajan Seshadri, Naresh Malhotra, Sujata Vemuri, Sundararajan K Pandalgudi, A&E Investment LLC, Agarwal Trademart, Celesta Capital, Export Import Bank of India, Indusage Technology Venture Fund, Qualcomm Asia Pacific, and Society for Innovation and Entrepreneurship are the selling shareholders in the offer for sale portion.

The offer also includes a reservation of 13,112 equity shares for company's employees who will get those shares at a discount of Rs 32 per share to the final issue price.

The fresh issue size has been reduced to Rs 240 crore from Rs 300 crore earlier as the company on June 15 raised Rs 60 crore in a pre-IPO placement by issuing 8.92 lakh equity shares to institutional investors including Tata AIG General Insurance, 360 ONE Special Opportunities Fund- Series 9 and 10, Motilal Oswal Midcap Fund, and Think Investments PCC.

4) Objectives of Issue

The OFS money will go to selling shareholders, while the net proceeds from fresh issue will be utilised for repaying debts (Rs 50 crore), funding a working capital gap (Rs 135 crore), and investment in product development (Rs 40 crore), besides general corporate purposes.

5) Lot Size

Investors can bid for a minimum of 22 equity shares and in multiples of 22 shares thereafter. Hence, the minimum investment by retail investors would be Rs 14,784 per lot and the maximum would be Rs 1,92,192 for 13 lots as they are allowed to invest up to Rs 2 lakh.

The company has reserved 75 percent shares of the net offer for qualified institutional buyers, 15 percent for high networth individuals and the balance 10 percent for retail investors.

6) Company Profile

Founded in 2007, Ideaforge is the leader in the Indian unmanned aircraft systems (UAS) market, with a market share of approximately 50 percent in FY22, as per 1Lattice Report). It had the largest operational deployment of indigenous UAVs across India, with an Ideaforge-manufactured drone taking off every 5 minutes on average for surveillance and mapping as of FY23.

It was ranked seventh globally in the dual-use category (civil and defence) drone manufacturers as per the report published by Drone Industry Insights in December 2022.

The company primarily manufactures UAS for surveillance, mapping and surveying, with manufacturing facility in Navi Mumbai, Maharashtra.

It caters to customers in defence, and civil segments comprising armed police forces, state police departments, disaster management forces, forest departments, and private contractors in connection with smart cities.

7) Financials

Ideaforge recorded a 27.3 percent decline in profit for 12 months ending March 2023 to Rs 32 crore, down from Rs 44 crore, but revenue from operations in the same period increased by 16.66 percent to Rs 186 crore. In FY21, it had a loss of Rs 14.6 crore on revenue of Rs 34.72 crore.

It had an outstanding order book of Rs 192.27 crore as of March 2023, declining from Rs 310.87 crore in FY22.

8) Promoters and Management

Ankit Mehta, Rahul Singh and Ashish Bhat are the promoters of company, who hold 28.39 percent stake in the company. Total promoters and promoter group shareholding in the company stands at 33.97 percent as of now.

Srikanth Velamakanni is Chairman and Independent Director on the board. Ankit Mehta is the Chief Executive Officer, Rahul Singh is the Vice President-Engineering, and Ashish Bhat is Vice President-Research & Development, who all are WholeTime Directors.

Ganapathy Subramaniam and Mathew Cyriac are the non-executive nominee directors, while Sutapa Banerjee, and Vikas Balia are independent directors.

9) Investors

Ideaforge has been backed by several marquee investors, including Qualcomm Asia Pacific, Infosys, and Celesta Capital. Florintree Enterprise LLP, backed by former Blackstone India Head Mathew Cyriac, is one of the largest shareholders in the company with 11.85 percent stake.

Venture capital investor Celesta Capital holds 12.78 percent stake in the company, while Infosys has 4.25 percent stake, and Qualcomm Asia owns 3.63 percent.

10) Listing & Allotment Dates

The IPO share allotment will be finalised by July 4, while the equity shares will be transferred to demat accounts of eligible investors by July 6. The unsuccessful investors will get their refunds by July 5.

Ideaforge will make its grand debut on the bourses on July 7.

Its IPO shares are being traded with massive 65-70 percent premium in the grey market, over the upper price band as it may be enjoying the first-mover advantage of listing in the industry, analysts on anonymity said. The grey market is an unofficial platform for trading in IPO shares.

JM Financial and IIFL Securities are the book running lead managers to the issue, while Link Intime India is the registrar.