ideaForge IPO: Shares Close Marginally Lower But At A Premium Of Over 90% On Day 1

After listing at a premium of over 94% at INR 1,305.10 apiece on the BSE on Friday (July 7), shares of drone startup IdeaForge largely maintained their gains throughout the day, closing 0.7% lower at INR 1,295.5.

During intraday trading, ideaForge jumped to as much as INR 1,344 on the BSE, up about 3% from its listing price.

The company had priced its IPO issue at INR 638-INR 672 per share. On the NSE, the shares listed at INR 1,300, a premium of 93.45% to the issue price.

The shares closed marginally lower at INR 1,297 on the NSE today.

A total of 10.4 Mn shares of the drone startup were traded together on BSE and NSE on day 1 as a publicly-listed company. 

The startup currently has a market cap of INR 5,398.43 Cr.

Commenting on the stock, Prashanth Tapse, senior VP research analyst at Mehta Equities, said, “Considering the overwhelming response from all types of investors followed by first-mover advantage, the valuation would be stretched post-listing and difficult to sustain… 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.”

It must be noted that negative market sentiment led to a lull in the new-age tech startup IPO market in 2022, which continues in 2023 as well. In 2022, new-age tech startups like OYO, Navi, ixigo, and Pharmeasy withdrew or deferred their plans to go public amid the market downturn.

In fact, ideaForge is the first new-age startup to take the IPO route in 2023. The IPO came six months after drone startup Droneacharya’s listing on the BSE SME platform in December 2022.

However, it remains to be seen if the stellar debut of ideaForge paves the way for more startup IPOs or if its shares follow the same trajectory as that of Nykaa and Zomato after their bumper listing in 2021.

“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. This is because after listing, the stock is already trading at a significant premium to its issue price,” said Anubhuti Mishra, equity research analyst at Swastika Investmart.

“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. However, aggressive investors can still hold it with stop loss at INR 1170,” Mishra added.

ideaForge reported a profit after tax (PAT) of INR 32 Cr in FY23, down from INR 44 Cr in the previous year.