They say a good start is half the job done. ideaForge Technology, India's largest drone manufacturing company has had everything going its way in recent times - The best IPO subscription figures in nearly two years, the best listing in nearly two years and so on.

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Shares of ideaForge listed at a 93 percent premium to its IPO price of Rs 672. At the listing day high of Rs 1,344, the stock was exactly double of its IPO price. The stock fell 10 percent on Monday and recovered another 9 percent on Tuesday. Although the stock is currently below its listing price, IPO shareholders are still sitting on substantial profits.

But should a new investor attempt to buy the stock? At elevated prices?

As we mentioned earlier, a good start is half the job done. But that is exactly what it is - half. Historical data compiled by CNBC-TV18 indicates that most of India's most-subscribed IPOs are trading below their post-IPO high. One of them is even trading below its IPO price.

Stocks like Latent View and Paras Defence, whose IPOs saw subscription of over 300 times, listed at a substantial premium to the issue price as well, but are currently trading at half the price of their respective post-IPO peak.

Capacite Infra, whose Rs 400 crore IPO saw subscription of 183 times, is not only trading 45 percent below its post-IPO peak, but is currently trading below its IPO price of Rs 250 as well.

Of course, there are exceptions, with the likes of Tega Industries, Mazagon Dock Shipbuilders, which continue to make new highs, delivering substantial profis to shareholders. It must be noted that barring Capacite Infra, all the other names are trading above their IPO price.

“These kinds of stocks, buy them once you have seen the actual performance, track record, listing history, one should not get carried away with the fancy which is getting built on the stock," Dipan Mehta of Elixir Equities told CNBC-TV18 on Tuesday. "No doubt its future will be fantastic and great, but in investing it’s important to buy good business at a reasonable valuation and I am not sure that valuations are reasonable for ideaForge. So, I will take a pass on this,” he added.

Siddhartha Khemka of Motilal Oswal also agrees with Dipan Mehta's assessment. He said that given the premium listing that the stock has seen, it will be difficult for an investor with a 1-2 year timeframe to buy the stock. "While it is a unique business which may continue to attract investors, one has to keep valuations in mind before buying now," he added.

First Published:Jul 12, 2023 7:20 AM IST