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Decoding Red Herring Prospectus of ideaForge

Drone manufacturing company, ideaForge has filed its Red Herring Prospectus (RHP) with market regulator Security and Exchange Board of India (SEBI). The Mumbai-based company is looking to raise around Rs 570 crore from the public market.<br>

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Decoding Red Herring Prospectus of ideaForge

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  1. DecodingRed Herring Prospectus ofideaForge Dronemanufacturingcompany,ideaForgehasfileditsRedHerringProspectus(RHP)withmarketregulatorSecurityandExchangeBoardofIndia(SEBI).TheMumbai-basedcompanyislookingtoraisearoundRs570crorefromthepublicmarket. ThefreshissuesizewillbeRs240crorewhilethecompanywillofferits48,69,712equityshares,aggregatingasumofaroundRs327crorethroughanofferforsale. ThecompanyhadfileditsDraftRedHerringProspectus(DRHP)withSEBIinFebruarythisyeartoraiseRs300croreviafreshissue.Aspertheboard,thesizeofthefreshissueofuptoRs300crorehasbeenreducedtotherevisedsizeofRs240crore. TheRHPfurtherrevealedthatthedronestartuphasraisedapre-IPOroundofRs60crorefromMotilalOswalMutualFund,ThinkInvestmentsPCC,360OneAssetManagementandTataAIGGeneralInsurance.Followingtheround,thecompanyhasbeenvaluedataroundRs2,560crore. ideaForgehasappointedJMFinancialandIIFLSecuritiesasthebook-runningleadmanagers(BRLMs)forthelistingwhileLinkIntimeIndiaPrivateLimitedwillbetheregistrar.

  2. Outofthetotalfreshproceedsfromthepublic,Rs135crorewillbeusedtowardsfillingtheworkingcapitalgap.ThecompanyplanstoutilizeafurtherRs50croreforrepaymentorprepaymentofborrowingfromHDFCBank,AxisBankandExportImportBankofIndiaandRs40croreforproductdevelopmentandtherestforothercorporatepurposes.Outofthetotalfreshproceedsfromthepublic,Rs135crorewillbeusedtowardsfillingtheworkingcapitalgap.ThecompanyplanstoutilizeafurtherRs50croreforrepaymentorprepaymentofborrowingfromHDFCBank,AxisBankandExportImportBankofIndiaandRs40croreforproductdevelopmentandtherestforothercorporatepurposes. TheofferperiodoftheIPOwillbefrom26thJuneto29thJune2023withapricebandofRs638-672.Aspertheindicativepostissuetimeline,7thJuly2023willbethelistingdateofthecompany. Foundedin2007,ideaForgefocusedonprovidingadvancedunmannedaerialvehicle(UAV)solutions.Itdesigns,manufactures,andsuppliesUAVsalongwithassociatedhardwarecomponentssuchaspayloads,batteries,chargers,andcommunicationsystems.Theyalsooffersoftwareandembeddedsub-systemsthatenableindustry-specificapplications. Additionally,thecompanyisdevelopingUAVsasanon-demandserviceforvariousapplicationssuchasDFR,progressmonitoring,andinspections.Thiswillallowquickdeploymentofdronestoassesssituationsandmakeinformeddecisionsinreal-time,evenbeforefirstrespondersarrive. ShareholdingPattern AsofthedateofRHP,CelestaCapitalisthelargeststakeholderinthecompanywith12.78%stakesfollowedbyFlorintreeEnterprisewhoowns11.85%ofthecompany.Promoters– AnkitMehta,RahulSinghandAshishBhatcollectivelycommand27.89%ofthecaptable.Thecompleteshareholdingpatternofthecompanycanbeseenbelow: FinancialPerformance ideaForge’srevenuefromoperationssurged16.7%toRs186croreinFY23fromRs159.4croreinFY22.ideaForgeprimarilyprovidesdronestoIndiandefenceforces,henceitremainsthelargestsourceofrevenueinFY23formingnearly70%ofthetotal.Inthecivilsegment,itsdronesareusedbyforestdepartments,statepolicedepartments,disastermanagementforces,amongothers.

  3. Besidesoperatingincome,ideaForgealsoearnedRs10.4croreasnon-operatingrevenue(incomeandgainsonfinancialassets).Besidesoperatingincome,ideaForgealsoearnedRs10.4croreasnon-operatingrevenue(incomeandgainsonfinancialassets). Followingthe42.7%and89.6%increaseinitscostofmaterialsandemployeebenefitstoRs 58.84croreandRs50.9crorerespectivelyduringtheyear,ideaForge’stotalexpenditurewentup39.8%toRs155.6croreinFY23.ideaForgespentaround27.37%ofitsoperatingrevenueonemployeebenefits. Therapidriseinexpensesnegativelyaffectedthecompany’sbottomline.ideaForge’sprofitsshrank27.3%toRs32croreinFY23ascomparedtoRs44croreinFY22.Significantly,thefirmrecordedalossofRs14.62croreinFY21. Thecontractioninprofitscanbeattributedtoover4XjumpinESOPexpenses(bookedunderemployeebenefits)ofRs27.7croreduringFY23. Forcompleteinformationvisithere

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