Ideaforge Technology Limited is the pioneer and the pre-eminent market leader in the Indian unmanned aircraft systems ('UAS') market, with a market share of approximately 50% in Fiscal 2022. They had the largest operational deployment of indigenous UAVs across India, with an ideaForge manufactured drone taking off every five minutes on average for surveillance and mapping as of Fiscal 2023. The customers have completed over 3,50,000 flights using the UAVs as of March 31, 2023. They have grown at a CAGR of 131.47% in terms of revenue from operations over the last three Fiscals, with a RoCE of 12.51% in Fiscal 2023. Company has one of the industry's leading product portfolios targeted at civil and defence applications (dual use). They have a broad range of products with feature-based differentiation such as weight class (approximately 2-7 kg), endurance class (25-120 minutes flying time), take-off altitude range (up to 6,000 meters), communication range (approximately 2-15 km), payload types, etc. Beyond the UAVs, they undertake a full integration of the payloads, communication system and packaging. They also build their own software stack required for flight safety, autopilot sub-system, battery, power and communication in the UAVs. They cater to domestic and international customers across defence and civil sectors, primarily for applications in surveillance, mapping and surveying. The UAVs have been used in extreme conditions, from very low temperatures at high altitudes such as in Ladakh to very high temperatures such as in the Thar desert. Some of the UAVs have flown more than 4,500 flights as against the minimum requirement specified in RFPs for 500 flights under warranty. Company's product portfolio consists of (a) Hardware, which primarily includes UAVs, payloads, batteries, chargers and communication system (which enables communication between the ground control station and the UAVs), (b) Software and embedded sub-systems, which includes the GCS software, which enables the controlling and management for the UAVs and autopilot sub-system, which enables remote control and autonomous completion of flights, and (c) solutions, which enables industry / application specific software that enhances the value of the UAVs to the end customer. The wide range of products gives them the necessary flexibility to meet the evolving demands of diverse customers across industries. Company's manufacturing facility, situated in Navi Mumbai, Maharashtra, has an area of approximately 21,000 sq. ft., and is equipped with advanced equipment, modern technology with automation systems and has the ability to manufacture a wide range of products. This facility is in compliance with ISO 9001:2015 requirements and is also equipped with a testing centre that houses an environmental stress screening ('ESS') chamber and a vibration table. While they produce composite structures of the UAV airframes and small component machining is done in house, they source commercial-off-the-shelf ('COTS') and customized components required for manufacturing of UAVs such as carbon tubes, propellers and cameras from the domestic as well as the international market. The product development centre, situated in Navi Mumbai, Maharashtra, helps them design and develop the UAVs, and with continuous customer insights, they are able to improve the performance of the UAVs. Company's largest customer is Signify Innovations India Limited, erstwhile Philips Electronics India Limited, which according to Frost & Sullivan in Fiscal 2022 had a 50% market share in India's functional decorative lighting category (including LED spotlights, LED down-lights and cove lights) and a 10% market share in India's true-blue decorative lighting segment (including chandeliers, wall lights, pendants, outdoor lights). In addition to Signify (Philips), they have Western Refrigeration Private Limited, Panasonic Life Solutions India Private Limited and Novateur Electrical & Digital Systems Private Limited as customers. In FY 22, company derived approximately 93.56% of the consolidated restated revenues from operations from repeat customers (defined as customers from which they have had revenues in the past three fiscal years). In the nine months ended December 31, 2022 and FY 22, they derived 73.63% and 78.81% of the proforma consolidated revenues from operations from repeat customers. In the nine months ended December 31, 2022 and in Fiscal 2022, the consolidated restated revenue from operations from the top ten customers were Rs 2,068.87 million and Rs 2,172.63 million, respectively, which represented 85.94% and 98.80%, respectively, of the consolidated restated revenues from operations. Company enjoyed relationships of over three years with seven out of these top ten customers. In addition, they are building an international customer base, primarily in the United States. Company's R&D department focuses on product designing, tools and mould designing, electronic circuit designing and prototype designing. Our R&D department independently develops ODM designs and verifies and develops OEM designs received from customers and converts such designs into deliverable products by improving the designs, recommending suitable raw materials and testing of trial products. As of February 28, 2023, the R&D team consists of 27 members, 14 of whom hold Bachelors of Technology (Electronics & Communication and Mechanical) and the remaining 13 have a diploma in electronics / electricals and graduate degree. In the nine months ended December 31, 2022 and in Fiscal 2022, Fiscal 2021 and Fiscal 2020, the R&D expenses on a consolidated restated basis were Rs 12.25 million, Rs 8.38 million, Rs 6.13 million, and Rs 9.00 million, respectively, which formed 0.51%, 0.38%, 0.38% and 0.64%, respectively, of the consolidated restated revenue from operations. Company has four manufacturing facilities with one located in the SIDCUL Haridwar industrial park in Uttarakhand and three in Noida in the National Capital Region. In line with the focus to provide end-to-end product solutions and to develop better control on the supply chain and improve the margins, they have backward integrated the major manufacturing processes. They have developed in-house capabilities so that they manufacture all mechanical components in house (save diodes and resistors). As of February 28, 2023, company had 1470 employees and 19 contract labourers. As per financial performance, ideaforge Technology Limited has posted total income / net profits (loss) of Rs 36.34 Cr / Rs (14.63) Cr (FY21), Rs 161.45 Cr / Rs 44.01 (FY22) and Rs 196.40 Cr / Rs 31.99 Cr (FY23). So as per last three years data, company has shown good growth, but net profit is zig-zag and also in FY21 company has posted losses. Company has posted an average EPS of Rs 7.6 and average RoNW of 9.83% for last three fiscals. Issue is priced at a P/BV of 7.74 as per NAV of 86.81 as on 31.03.23. If we attribute latest earnings of FY22 on fully diluted equity post issue, then asking price is at a P/E of around 63.63 and as per FY23 earnings P/E is around 87.54, which looks aggressively priced. As per RHP, there comparison between listed peers is shown in above table. On BRLM's front, two lead managers are associated with this IPO, and have handled around 60 IPOs in last three fiscals.JM Financial Limited : This is 30th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue price or at par on the day of listing. As of now, from last 10 IPOs, 2 are trading below issue price and remaining are trading above issue price or at par. ( As on 22.06.2023 ) IIFL Securities Limited : This is 32nd IPO from this BRLM. From last 10 IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing. As of now, from last 10 IPOs, two are trading below issue price and remaining are trading above issue price or at par. ( As on 22.06.2023 ) As per financials, Ideaforge Technology Limited has shown very good growth, RoNW is 9.85% and P/E is respectively 63.63 and 87.54 as per FY22 and FY23 earnings, which looks aggressively priced. Company is in business of UAV, which is next-gen business and has ample growth opportunities. This sector has high competition from international players and it requires continuous research to be ahead from competition. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
✍️ Post a Comment