After an exceptional debut on Friday, July 7, shares of ideaForge Technology fell almost 10 percent on Monday, July 10 on the back of profit booking.
The drone maker listed at ₹1,300, a massive 93.45 percent or ₹628 premium versus its issue price of ₹672. The stock ended at ₹1,295.50, up 92.7 percent or ₹623.5 from its IPO price.
However, in today's deals, the stock fell as much as 9.6 percent to ₹1,171.
The initial public offering (IPO) of the drone maker received robust demand from all sections of investors. It was subscribed 106.06 times in the four days of bidding (June 26-30). The issue received bids for 49.30 crore shares as compared to 46.48 lakh shares on offer.
The ₹567-crore ideaForge IPO was open for subscription between June 26 and 30 at a price band of ₹638-672. The IPO consisted of a fresh issue of equity shares worth up to ₹240 crore and an offer for sale (OFS) of up to 48.6 lakh shares by selling shareholders.
What should you do with the stock now?
Vinit Bolinjkar, Head of Research at Ventura Securities believes that the bumper listing was along expected lines considering the grey market premium. Going ahead the outlook seems promising given the extremely huge opportunity for the drones market, he added.
Nirav Karkera, Head of Research at Fisdom noted that post the stellar listing day gains, it is only natural for investors to wonder about the path ahead.
"The company’s growth prospects remain robust and one can expect it to flourish in the sunrise segment. However, one could expect some pullback in prices on account of profit-taking in the near term. Such dips can be looked at as opportunities to re-enter while being conscious about business and financial developments. For shorter-term investors, it could make sense to consider booking profits, at least partially, for now. Longer term investors could either stay put or partially exit with a view to re-enter at dips," he advised.
Anubhuti Mishra, Equity Research Analyst at Swastika Investmart also stated that IdeaForge Technology made a tremendous entry into the market at a listing price of ₹1,300. This is a significant gain of around 93 percent for investors, as the company's issue price at the upper band was ₹672.
"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.
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 1,170," suggested Mishra.
ideaForge holds a significant market share of approximately 50 percent in the Indian unmanned aircraft systems ("UAS") market as of fiscal 2022. The company boasts the largest operational deployment of indigenous drones across India, with an ideaForge-manufactured drone taking off every five minutes on average for surveillance and mapping purposes, as per the company's DRHP report.
Founded in 2007 by Ankit Mehta, Rahul Singh, and Ashish Bhat, ideaForge made early strides in the UAV market in India and became the first organisation to indigenously develop and manufacture VTOL UAVs in 2009.