Ideaforge Techno Ltd ( NSE: IDEAFORGE ) is trading at a 40% discount from its listing price of ₹1300. Ideaforge is in the business of manufacturing Drones, which is one of the fastest growing industries in India.
You all might have seen a drone in the movie ‘3 Idiots’ which in real life was built by Rahul Singh, Co-founder & CTO of India’s largest Drone manufacturing Company in India i.e. Ideaforge Technologies Ltd.
Ideaforge almost doubled its investor’s money on listing while IPO was offered at ₹672 per share and listed at ₹ 1300 on 7th July, 2023 which is a listing gain of almost 93%. But as of 9th Feb, 2024 stock closed at Rs 737, which is 43% lower from its listing price.
It means Investors who have invested in IPO are now sitting with gains of just 10% and Investors who have invested post IPO are in loss of more than 40%.
Ideaforge company business details
Ideaforge have its own inhouse product development centre through which they design, develop and manufacture Unmanned Aerial Vehicles (UAV). They have more than 50% market share in the India Drone Industry.
Recently in Dec 2023, the company ranked as fifth global dual category (civil & defence) drone manufacturer by Drone Industry Insights, the world’s leading drone survey and analysis company.
Why Ideaforge Share fell so far?
The major reason for fall in share of Ideaforge –
- IdeaForge’s high valuation at the time of listing, the stock was listed at a premium of more than 90% from its issue price. When the IPO was issued P/E (Price/Equity) was 87.52 and post listing P/E was 165.54 . So stock dragged from high valuation to reasonable valuation.
- IPO subscribers consistently booking profits after listing might have led shares of the company to be in downtrend after listing.
- Another reason behind the fall of Ideaforge shares is weak results in Q1FY24 & Q2 FY24.
In Q1 FY24 Y-o-Y basis Revenue reduced by nearly 2% from Rs.99.3 Cr to Rs.97.1 Cr and PAT of Company reduced by more than 50% from Rs 41.3Cr to Rs 18.9Cr. - In Q2 FY24 revenue decreased to nearly half to Rs.23.7Cr from Rs 40.3Cr in the same Quarter previous year and profit decreased to just 1/4th from Rs.4Cr to Just Rs 0.90Cr.
Can Ideaforge show reversal from current levels?
IDEAFORGE may show a reversal upside from current levels for the following reasons
Fundamentals reasons why Ideaforge may show reversal
IdeaForge posted good results in Q3 FY24 where its Revenue increased to Rs. 90.9 Cr from Rs. 7.8Cr in the same Quarter the previous year and Rs. 23.7Cr and Profits also increased rapidly to Rs.14.8 Cr from a loss in a similar Quarter last year and Rs.0.90Cr profit in the previous Quarter.
Also, Ideaforge’s share price increased by more than 10% on the very next day of the declaration of the result, however, there is some profit booking after it due to market conditions.
Technicals reasons why Ideaforge may show reversal
IdeaForge has been in consolidation for the last four months and accumulation of stock is going on in this period.
Shares of Ideaforge are trading near its IPO issue price and this level may act as support since investors who have missed the opportunity of getting allotment in IPO may invest in IPO issue range. However, charts may turn positive above ₹850 levels.
Industry Analysis of Ideaforge
Drone Manufacturing is in a Sun rising Industry that is a rapidly growing Industry not only in India but in the whole world. It is expected that Drone will be used in many sectors such as Defence, Civil, logistics,etc. This industry could be manyfold from current levels in the coming 5-10 years.
Other major reasons why Ideaforge may show reversal
Ideaforge has more than 50% market share in India and Globally the company has ranked 5th.
Company has a total of 32 patents granted and 34 are pending, which is a great achievement.
Company has started billing for Drone as a Service (DAAS) business through which they will provide Drone related services through which they can earn recurring income and this could be a new stream of income in the coming days. Company is building India’s first drone innovation platform.
IDEAFORGE sales growth over the years
| Time Period | Growth Rate |
|---|---|
| 1 Year | 16.66% |
| 3 Year | 136.31% |
| 5 Year | 55.62% |
IDEAFORGE profit growth over the years
| Time Period | Growth Rate |
|---|---|
| 1 Year | -27.31% |
| 3 Year | 63.4% |
| 5 Year | 75.62% |
IDEAFORGE ROCE% over last 5 years
| Time Period | ROCE (%) |
|---|---|
| 1 Year | 16.06% |
| 3 Year | 17.15% |
| 5 Year | 5.14% |
Conclusion
Investors who are looking to invest in the Drone Industry can look towards investing in India’s largest Drone manufacturing company.
Ideaforge is the largest Drone manufacturer in India and is among only 2 listed Drone companies. This might be good opportunity for long term investors.
