The shares of IdeaForge Technology, India's leading drone maker, are expected to make their Dalal Street debut tomorrow (July 7) on BSE and NSE. Earlier, the company was scheduled to be listed at the bourses on Monday, July 10, but the date has now been advanced. After robust subscription and allotment, market experts are highly bullish on ideaForge shares listing.

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The Rs 567-crore initial public offering (IPO) has seen a bumper response from the investors during the four-day bidding process between June 26-30 fetching an overall subscribed 106.06 times. It became the first issue after December 2021 to get bids for more than 100 times.

The category reserved for qualified institutional bidders (QIBs) was subscribed a whopping 125.81 times, while the quota for non-institutional bidders (NIIs) was booked 80.58 times. The portion of retail investors was subscribed 85.20 times, while the employees' portion fetched 96.65 times bids.

GMP indicates upward trend

The grey market indicates an upward trend as premium for shares stayed firm in the unlisted market. According to market observers, the grey market premium (GMP) of ideaForge shares stood at Rs 518, indicating big listing gains for investors. If we consider the upper price band of Rs 672, the company's shares are expected to get listed at a healthy premium of 77 percent.

However, it is important to note that grey market premiums are just an indicator as to how the company's shares are stacked up in the unlisted market and are subject to change rapidly.

Book profit on listing and exit position, say analysts

Considering the overwhelming response from all types of investors, analysts expect a strong 70 percent plus listing gain, backed by first-mover advantage and a healthy market mood.

"Undoubtedly, it was a great opportunity for investors to apply for this IPO, but now we will recommend investors book profit on listing and exit their position, as after such a high listing, shares will be overvalued, and secondly, there is some business-related risk as well," said Anubhuti Mishra, Equity Research Analyst at Swastika Investmart.

"With market undertone remaining optimistic if we get stronger listing gains over and above 70 percent, We recommend allotted investors to book profits on the listing day while risky fancy investors can hold for medium to long term to play on drone demand," according to Mehta Equities.

The company had already garnered Rs 182 crore from 14 anchor investors. The company has allocated 63.84 lakh equity shares at Rs 285 per share to anchor investors.

The public offer consists of a fresh issue of Rs 240 crore and an offer for sale of 48.69 lakh equity shares by shareholders. Under the OFS, Ashish Bhat will offload 1.58 lakh shares, Amarpreet Singh will sell 8,362 shares, and Nambirajan Seshadri will sell 22,600 shares. Other selling shareholders include A&E Investment LLC, Agarwal Trademart Pvt Ltd, and Celesta Capital II Mauritius, among others.

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.

The drone maker is backed by Infosys, Qualcomm, Celesta, Florintree, EXIM Bank, Indusage Technology Venture Fund, and Infina Finance.

Motilal Oswal Investment Advisors acted as the sole book-running lead manager while KFin Technologies was the registrar to the issue.

First Published:Jul 6, 2023 4:52 PM IST