IdeaForge Technology Ltd. will launch its initial public offering on June 26. The dronemaker looks to raise a total of Rs 567 crore, of which Rs 240 crore will be raised through a fresh issue.
Issue Details
Issue Opens: June 26
Issue closes: June 29
Total Issue Size: Rs 567 crore
Face Value: Rs 10 per share
Fresh Issue: Rs 240 crore
Offer for Sale: Rs 327 crore
Shares for OFS: 48,69,712 shares
Price Band: Rs 638–672 per share
Lot Size: 22 shares
Listing: BSE and NSE
The fresh issue of shares dropped to Rs 240 crore from an initial amount of Rs 300 crore after the company raised Rs 60 crore by issuing 8.92 lakh shares in a pre-IPO placement.
Business
IdeaForge is a vertically integrated company that designs and manufactures world-class drones for mapping, security and surveillance applications. The company is a pioneer and pre-eminent market leader in the Indian unmanned aircraft systems market, with a market share of approximately 50% in financial year 2022.
The company saw the largest operational deployment of indigenous unmanned aerial vehicles across India, with an IdeaForge-manufactured drone taking off every five minutes.
IdeaForge is ranked seventh globally in the dual-use category (civil and defense) drone manufacturers, according to a report by Drone Industry Insights last December.
Use of Proceeds
The funds raised will be used for the following purposes by the company:
Repayment/prepayment of certain indebtedness availed by the company: Rs. 50 crore.
Funding working-capital requirements: Rs 135 crore.
Investment in product development: Rs 40 crore.
General corporate purposes.
Peer Comparison
Since there are no listed companies that exclusively undertake the manufacturing of drones, a proxy set of peers have been identified for the company depending on basis factors like the scale of the business, exposure to the defence sector and manufacturing of electronics products.
Risk Factors
The industry is highly regulated and subject to change. If the government's rules and regulations are not complied with, the company's business will be affected.
Since the company is heavily reliant on sales to the Union government, a decline in the government budget, order reduction, termination of contracts would have an adverse impact on the business.
The historical and current book, along with the growth rate of the company may not be indicative of the number of orders the company may receive in the future.
IdeaForge is highly dependent on global vendors for the supply of certain components. If these components or raw materials become unavailable or scarce, the company may incur manufacturing and delivery delays that could damage the business.
The products are complex and technologically advanced and could have unknown defects or errors.
Hacking of the company’s software and solution or any other kind of cyber-attack could have a material adverse effect on the business.
Expansion into the international market may not be successful.
If the drone industry does not experience significant growth, or if the products lack multiple use applications, then the business will not be able to achieve the anticipated level of growth.
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