Forge Auto International Limited IPO Introduction
In the investment world of 2024, one could notice the entry of a notable one, the Forge Auto International Limited IPO that went public to mark a great moment for investors interested in the automotive and manufacturing sectors. Forge Auto was formed in the year 2001 and has carved a niche for itself in forging and machining complex components both for auto and non-auto industries including agriculture and railway sectors. This blog goes into depth on what you should know about this IPO, how the market received it, and why it could be an investment opportunity worth taking a gander at.
The Success Saga of Forge Auto International Limited
Forge Auto International Limited is more than a manufacturing company; it is a center of precision engineering, and ISO 9001:2015, ISO 14001:2015, and ZED GOLD in sustainability are awards they have achieved. Such an emphasis on quality, precision, and timely delivery has earned the company a position among the most reliable partners in automotive supply chains and beyond.
IPO Key Details: Dates, Pricing, and Subscription
IPO Dates: The Forge Auto International IPO started accepting applications on September 26, 2024, through September 30, 2024, while the date for the expected listing is October 4, 2024.
Now, after all of the above information, below are the main dates related to the Forge Auto International Limited’s IPO:
| Event | Date |
|---|---|
| IPO Open Date | September 26, 2024 |
| IPO Close Date | September 30, 2024 |
| Basis of Allotment Finalization | October 1, 2024 |
| Refund Initiation | October 2, 2024 |
| Credit of Shares to Demat A/c | October 3, 2024 |
| Listing Date | October 4, 2024 |
Here’s a table summarizing Forge Auto International Limited’s IPO
| IPO Details | Information |
| Company Name | Forge Auto International Limited |
| IPO Size | ₹31.10 crore |
| Fresh Issue | ₹31.10 crore (2.88 lakh equity shares) |
| Price Band | ₹102 – ₹108 per share |
| Face Value | ₹10 per share |
| Listing Exchange | NSE SME |
| Minimum Bid Lot | 1200 shares |
| Minimum Investment | ₹129,600 (at the lower price band) |
| Issue Type | Book-built Issue |
| Issue Category | SME IPO |
| QIB Allocation | 15% |
| NII Allocation | 35% |
| Retail Allocation | 50% |
| Company Sector | Automotive Components Manufacturing |
Forge Auto International’s IPO Financials
Here is the financial statement of Forge Auto International Limited in tabular format:
| Financial Metric | 31 Mar 2024 | 31 Mar 2023 | 31 Mar 2022 |
|---|---|---|---|
| Assets | ₹10,148.67 L | ₹8,274.29 L | ₹5,677.94 L |
| Revenue | ₹18,157.3 L | ₹17,764.43 L | ₹13,400.28 L |
| Profit After Tax (PAT) | ₹668.88 L | ₹496.29 L | ₹264.34 L |
| Net Worth | ₹2,020.88 L | ₹1,660.35 L | ₹1,367.73 L |
| Reserves and Surplus | ₹1,276.88 L | – | – |
| Total Borrowing | ₹4,046 L | ₹3,183.2 L | ₹2,620.16 L |
- Revenue increases by 2% between March 2023 to March 2024. This type of growth depicts a level growth curve.
- PAT has registered a high growth of 35% during the same period, and this reflects the fact that the profitability has gone on the improve.
- Both Assets and Net worth are constantly increasing in the years. The expansion of the company has been depicted.
- This could be growth to support the growth just witnessed or raise red flags on lenders’ and investors’ radars in total borrowing terms.
This table gives an easy snapshot of Forge Auto International Ltd’s financial health and performance trend, which can, in turn, very importantly be that of investors while evaluating the IPO.
Forge Auto International’s IPO GMP and Subscription
From the reports available up to my last update, this is what we know so far about Forge Auto International Limited’s IPO in regard to GMP and subscription status:
Grey Market Premium: The grey market premium of Forge Auto International IPO stood at ₹36 on the second day of its subscription. It would translate to an appreciation of 33.33% over the upper price band ₹108. That meant the market was optimistic and people believed that the stock would be listed at a higher price than the issue price.
Subscription Status: The IPO received overall subscription of 8.94 times by the second day of its subscription. The retail category was most interest, subscribed 11.64 times. The QIB subscribed 7.40 times, whereas NII subscribed 4.68 times. So from here, the subscription through all categories is quite healthy and reflects the interest of investors in the IPO.
High subscription rate-the subscription rate was high, especially in the retail and QIB categories-and a positive GMP are good signs about having substantial market confidence in Forge Auto International’s IPO. This is because there may have been various reasons like company performance, sector outlook, or the general market sentiment towards IPOs at that time.
Remember that GMP is no official or assured measure but only an indication of market sentiment from the grey market, which gets affected by a great many speculative factors. But the subscription rate during the IPO period is a concrete measure of investor interest.
Forge Auto International’s IPO EPS and PE Ratio
Based on the data up to September 28, 2024, we can deduce these things about Forge Auto International Limited’s IPO EPS and PE (Price to Earnings) Ratio:
Calculation of EPS: Since the exact EPS figure is not stated directly, from the financials we can infer the following data:
PAT (Profit After Tax) for FY 2024: ₹668.88 lakh
Number of shares post-IPO: If we consider the shares issued post-IPO, which includes the fresh issue of 28.80 lakh shares and no change other than assuming it doesn’t change equity capital too much (no further explanation is provided), then the shares outstanding would be at least around 31.10 lakh shares-a rough estimate taking into account the size of the IPO and the assumption that an offer for sale did not take place.
Using a close approximation assuming no other outstanding shares to make the calculation simpler:
EPS = PAT / Number of Shares = ₹668.88 lakh / 31.10 lakh equity shares ≈ ₹21.51 per share (I used an approximation since the actual number of shares after IPO is not stated in your provided details).
PE Ratio:
Price band for the IPO was set at ₹102 to ₹108 per share.
Let’s do a quick calculation using the higher end of the price band:
PE Ratio = Share Price / EPS = ₹108 / ₹21.51 ≈ 5.02 (once more, the answer is approximate given the data).
PE Ratio of 5.02x, which places Forge Auto in an undervalued position, especially by comparison to industry averages at 49.97x, which means investors pay a little less for the same and to that end are apparently getting something of a bargain on simple basis.
SWOT Analysis of Forge Auto International Limited
Strengths: Company has its existence since 2001, diversified product portfolio, high production capacity, and various certifications.
Weaknesses include very high debt-to-equity, very dependent on the automotive sector, and exposed to raw material price volatility.
Opportunities include growing the automotive market, improvements in technology in forging, and international opportunity.
Threats include high competition, automobile industry-related cycles, and changes in regulations.
Why you should invest in Forge Auto IPO
The operational strengths of the company, undervaluation in the market, and positive sentiment through subscription rates and GMP position it as an interesting investment opportunity. The investors need to offset this with the sector dependency and the risks of competition in the market.
Conclusion: Forge Auto IPO – An Investment to Watch.
The IPO of Forge Auto International Limited is not so much about entry into the market but new pathways into investment opportunities within the manufacturing sector. Considering its strategic focus on both the domestic and international markets, the IPO of Forge Auto could give savvy investors a mix of growth, value, and sectoral diversification.
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