IdeaForge IPO: Allotment status, share price

IdeaForge is India’s leading drone maker. It was founded in 2007 by three students from ITT Bombay; Ankit Mehta, Rahul Singh and Ashish Bhat.

The stock IPO’d in July, 2023 at Rs 672 and closed the first day up a whopping 94.2 per cent to Rs 1,305.10. The company raised approximately 5.7-billion rupees in the process.

“We felt that an IPO was a better option compared to private capital,” Mehta told Forbes India this year.

The IPO was supported by topline growth: Ideaforge grew its revenue from $347-million rupees in 2021 to $1.8-billion rupees in 2023.

According to the Economic Times, the IPO was subscribed 106 times over and the quota reserved for individual investors subscribed 85.1 times.

Kranthi Bathini, director of equity strategy at WealthMills Securities, said the IPO was driven by scarcity and sizzle.

“It was the only listed drone company, there were marquee investors onboard, but the initial euphoria fizzled out post listing,” he said.

Addressing whether or not the stock is now overvalued, one observer said no.

“ideaForge is one of the largest players in the Indian drone market,” says Sneha Poddar, AVP, Fundamental Research. “The high ESOP cost in FY23, would have affected their profitability. For that reason, in terms of price–earnings ratio it is looking a little expensive—at the higher price band, the company has a P/E multiple of 87.5x (to its FY23 earning).  The average P/E ratio for the industry as stated in the RHP stands at 57.93. If you look overall potential of the market, the valuation seems justified.”

Gani Subramaniam, senior partner at Celesta Capital, an early investor in the Indian company, agrees.

“ideaForge is well-positioned for scalable and profitable growth,” he said. “The company has a focus today on developing rugged drones for the enterprise and defence markets, sectors that continue to demonstrate strong demand for high-performance drone technology. The utilisation of drones in India is still at an early stage and the potential for expansion and adoption of drones across numerous industries remains largely untapped.”

IdeaForge’s largest investor, Florintree Advisors, has generated a return of nearly 600 per cent on the stock and has subsequently invested in other Indian drone companies. Mehta says the country is now poised to be a leader in the sector.

“We have been slightly late adopters, but we are there now,” he said. “The government wants India to become the drone hub of the world by 2030, and to drive that potential home, induction in technology and ease in policy is growing.”

What does Ideaforge do?

According to the company, IdeaForge:

“is the pioneer and the pre-eminent market leader in the Indian unmanned aircraft systems (“UAS”) market. We had the largest operational deployment of indigenous UAVs across India, with an ideaForge manufactured drone taking off every five minutes for surveillance and mapping on an average. Our customers have completed over 380,000 flights using our UAVs. We ranked 7th globally in the dual-use category (civil and defense) drone manufacturers as per the report published by Drone Industry Insights in December 2022.”