Forge Auto International IPO: Review, Valuation, Date & GMP

Forge Auto International IPO-Complete Overview

Forge Auto International IPO an SME IPO is a book-built issue of Rs.31.10 crore by Forge Auto International Limited, which was established in 2001 as an engineering company that forges and produces intricate, precision-machined, forged, and safety-critical parts for the non-auto (agricultural parts, hydraulic parts, striking tools) and automotive industries (automobiles, tractors, railways).

The company provides services to both domestic and international original equipment manufacturers (OEMs) that are involved in the production of goods for the non-automotive and automotive industries. As does the consumer base, a wide range of industries employ its products.

The company's greater focus on its products is seen in the revenue it generated from the sale of machined and forging items, which climbed by 27% CAGR from Rs.10951.99 lac in Fiscal 2021 to Rs.17664.85 lac in Fiscal 2023.

It produces gear blanks, stub axle assemblies, flange yokes, ball studs, and short and long forks for use in tractors, sledgehammers, commercial vehicles, and railway bogies and holds certifications in quality management systems (ISO9001:2015), environmental management systems (ISO14001:2015), occupational health and safety systems (OHSAS18001:2007), automotive component manufacturing (IATF 16949:2016), and sustainability with zero effect and zero defect (ZED GOLD) from the Government of India.

This new SME IPO  is to be launched on 26 September 2024, and its ‘initial public offering’ will end on 30 September 2024. 

Forge Auto International IPO Overview

The Rs.31.10 crore Forge Auto International IPO consists of an entirely fresh issue of 28.8 lac Shares. 

This SME IPO date is from September 26-September 30, 2024. Forge Auto International IPO price is Rs.102 to Rs.108 for each Share. The expected IPO listing date is on Friday, 04 October 2024, and listing at NSE and SME.

To open a demat account and apply for the IPO, Click Here.

 

Company Financial

The company’s revenue rose by 2% and PAT grew by 35% during FYs ending 31 March 2024 and 31 March 2023.

(Amount in Lac)

 

Revenue Bifurcation

The revenue bifurcation for various activities is shown below:

(Amount in lac)

 

Product-wise Revenue Breakdown 

(Amount in lac)

 

Sales-wise Revenue Breakdown During The Last Three Fiscals

(Amount in lac)

 

 

 

The Objective of The Issue

The company desires to use the Net Proceeds from the Issue to fulfill its following goals:

• Funding the company's needs for working capital

• Repayment of a specific loan that the business took out

• General corporate purposes.

 

Peers of Forge Auto International Ltd.

 

Note:-

The basic EPS of the peers is for the financial year ending 31 March 2024.

 

Evaluation

The IPO price is Rs.102 to Rs.108 for each Share.

Evaluation of P/E Ratio

Considering the FY ended 31 Mar 2024 with an EPS of Rs.10.21 from the last year, the resulting P/E ratio is 10.58x.

Considering the weighted EPS of Rs.8.31 for the last three years, the P/E ratio is 13x.

Comparative Analysis With Listed Peers

The average P/E Ratio of the industry is 49.97x.

In simple words, the P/E ratio of Forge Auto IPO (10.58x), compared with the industry’s average P/E of 49.97x, has an undervaluation (on a P/E Ratio basis only). Hence the price of the Share seems fairly (fully) priced for the investors when considered based on the average P/E ratio of the industry. 

 

 IPO's Strengths 

• An enduring presence in the sector dating back to 2001

• The broad range of products serving the automotive and non-auto industries

• Robust production capacity of 25 lakh units for machining and 20000MT for forging

• Numerous quality certifications, such as IATF 16949:2016, ISO 14001:2015, and ISO 9001:2015

 

IPO’s Weaknesses

• A heavy reliance on the auto industry

• Notable 1.94 debt-to-equity ratio

• Price fluctuations for basic materials

• Fierce rivalry in the engineering and car component industries

• Economic downturns that have an impact on the automobile sector.

 

 

Forge Auto International IPO GMP Today

Forge Auto International IPO GMP is Rs.0 as of 25 September 2024. With a price of Rs.108, the estimated IPO listing price is Rs.108 at the time of writing this information.

IPO Timetable (Tentative)

The IPO date is from September 26 to September 30, 2024, with allotment on October 01, refund initiation on October 03, and listing on October 04, 2024.

 

Forge Auto International IPO Details 

The IPO with a Face Value of Rs.10 per share offers a total issue size of 2,880,000 Shares (Rs.31.10 Cr).

Forge Auto International IPO Lot Details 

The IPO allows retail investors to invest in a minimum and maximum of 1 Lot (1200 Shares) amounting to Rs.1,29,600 and in multiples thereof, while for HNI investors, the minimum Lot is 2 (2400 Shares) amounting to Rs.2,59,200.

 

Forge Auto International IPO Reservation (% of Net Issue)

 

Promoters And Management of Forge Auto International Ltd.

• Parmod Gupta

• Rajan Mittal.

IPO Lead Managers

• Hem Securities Limited

Dividend Policy

The company has not paid any dividends since incorporation.

Conclusion

The company manufactures precision machined, forged, and safety-critical parts for the automotive, agricultural, and other industries. Throughout the reporting periods, it showed consistent development in both its top and bottom lines. FY24 earnings suggest that the issue is priced fairly (fully).

Forge IPO is showing a 0% gain or loss in its listing price in the grey market as of the date of writing this content. Hope this blog helped you with the information you were seeking.

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

To Read the Prospectus of the Company Click Here to Download the DRHP.

Disclaimer: 

The content is purely for educational and information purposes only. We do NOT encourage/advise/suggest our active readers to be involved in any kind of buying or selling securities activities. Always consult your eligible financial advisor for investment-related decisions. The author does NOT through this blog intend to involve readers in trading.  

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