A profit booking was seen on July 10 in IdeaForge Technology, which had a flying start on the bourses on July 7. This came after analysts said the investors who got the share should book profits, at least partially, and those looking to invest should wait for a dip.
The unmanned aircraft vehicle (UAV) manufacturer opened with a massive 94 percent premium, the highest among companies listed so far in 2023. At 12.20 pm, it was trading with a cut of 7 percent at Rs 1205.40 on BSE. It had hit a high of Rs 1,344 in its debut session.
“While there is no doubt that this was a great opportunity for investors, and it has delivered some surprising returns, we would recommend that investors should book profits and exit their positions,” said Anubhuti Mishra, Equity Research Analyst, Swastika Investmart.
“This is because after listing the stock is already trading at a significant premium to its issue price. Additionally, there are some business-related risks associated with the company, so it is better to lock in these gains now rather than take the risk of carrying them forward.”
Aggressive investors can hold the stock with a stop-loss at Rs 1,170, Mishra added.
The Ideaforge IPO was subscribed 106.6 times, with qualified institutional investors buying 125.81 times their allotted quota, retail investors 85.20 times and high net-worth individuals 80.58 times the portions set aside for them during June 26-30.
The drone manufacturers mopped up Rs 567 crore via the IPO, including Rs 240 crore through the fresh issue. The offer for sale portion was more than Rs 320 crore. The price band for the offer was Rs 638-672 a share.
Valuation worries
“We recommend to book partial profit on listing day and hold partial allotment for the long term…,” said Astha Jain, Senior Research Analyst, Hem Securities.
Analysts note that Ideaforge has strong relationships with a diverse customer base along with significant product development capabilities powering its software and solutions and product differentiators. The company’s in-house design to delivery capabilities and strong management, too, work in its favour, they say.
Manish Chowdhury, Head of Research, StoxBox, also agreed that the company’s first-mover advantage, a diversified product portfolio and a wide range of customers will help sustain business performance in the long run.
He, however, advised investors to book profit on the opening day and re-evaluate the business once there is comfort on the valuation front.
As of May 2023, IdeaForge served 265 customers including some central armed police forces, state police departments, disaster management forces, forest departments and private contractors in connection with the smart cities project. It had an order book of Rs 192.3 crore as of March 2023.
IdeaForge is backed by investors including Infosys, Qualcomm Asia Pacific, Celesta Capital II Mauritius, Celesta Capital II-B Mauritius, Florintree Enterprise LLP, Export-Import Bank of India and Infina Finance
“Overall patient investors could remain invested in the stock as there is a long runway for growth. If one is looking for short-term gain, then they can book profit as near-term valuations can get stretched post the premium listing,” said Narendra Solanki, Head- Equity Research Anand Rathi Shares & Stock Brokers.
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