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Forge Auto International IPO: Things Smart Investors Need to Know

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Overview of the Company: Forge Auto International Limited, originally formed as a partnership firm in 2001, was later converted into a private limited company in April 2023, and subsequently into a public limited company in June 2024. The company, led by promoters Parmod Gupta and Rajan Mittal, operates from its registered office in Ludhiana, Punjab. Forge Auto specializes in manufacturing components for the auto industry, offering advanced automotive forging solutions for both domestic and international markets.

Core Business and Market Position: The company is known for its expertise in forging auto components and caters to leading Original Equipment Manufacturers (OEMs) globally. With a strong emphasis on precision and quality, Forge Auto International has established a reputation as a trusted supplier in the automotive sector. The company aims to leverage its position in the market by expanding its product portfolio and enhancing its manufacturing capabilities to meet rising industry demands, particularly in the electric vehicle (EV) segment.

Forge Auto International IPO Details and Objectives

Details

Information

Issue Size

₹31.10 Crores (Fresh Issue of 28.8 Lakh Shares)

Price Band

₹102 to ₹108 per share

Minimum Lot Size

1,200 shares

Minimum Retail Investment

₹129,600

Minimum HNI Investment (2 lots)

₹259,200

 Registrar

Bigshare Services Pvt Ltd

Market Maker

Hem Finlease

Objectives
The key objectives of this IPO are: - Expanding the company’s manufacturing capabilities to cater to increased demand. - Funding working capital requirements to support growing operations. - Repayment or prepayment of certain outstanding loans to strengthen the balance sheet. - Covering general corporate purposes, including expanding market presence and enhancing operational efficiencies.

By fulfilling these objectives, Forge Auto International aims to further solidify its position in the automotive forging industry and take advantage of emerging market opportunities, particularly in the electric vehicle sector.

Timeline of Forge Auto International IPO

Event

Date

IPO Open Date

Thursday, September 26, 2024

IPO Close Date

Monday, September 30, 2024

Basis of Allotment

Tuesday, October 1, 2024

Initiation of Refunds

Thursday, October 3, 2024

Credit of Shares to Demat Accounts

Thursday, October 3, 2024

Listing Date

Friday, October 4, 2024

Cut-off Time for UPI Mandate Confirmation

5 PM on Monday, September 30, 2024

Pricing and Lot Size of Forge Auto International IPO

Price Band for the IPO

The price band for the Forge Auto International IPO is set at ₹102 to ₹108 per share, offering investors flexibility in choosing their bid price within this range.

Minimum Lot Size and Application Details

  • Minimum lot size: 1,200 shares.
  • Retail investors can apply for a minimum of 1 lot (1,200 shares) amounting to ₹129,600.
  • High Net Worth Individuals (HNI) need to apply for a minimum of 2 lots (2,400 shares) amounting to ₹259,200.
  • Investors can apply for additional shares in multiples of 1,200.

How to Apply for the Forge Auto International IPO?

Online Application Process:

  • Visit the Bajaj Broking website or app.
  • Navigate to the IPO section and select 'Forge Auto International IPO'.
  • Enter your details, and select the number of shares and lot size.
  • Complete the application using UPI or ASBA for payment.

Forge Auto International IPO Subscription Status

Subscription status updates will be available on NSE Emerge's website and will be updated daily once the IPO opens for bids.

Financial Health and Performance

Key Financial Metrics:

  • Revenue Growth: Forge Auto International's revenue grew by 2% from ₹17,764.43 lakhs in FY 2023 to ₹18,157.30 lakhs in FY 2024.
  • Profit After Tax (PAT): The company reported a 35% increase in PAT, rising from ₹496.29 lakhs in FY 2023 to ₹668.88 lakhs in FY 2024.
  • Assets: Total assets increased to ₹10,148.67 lakhs in FY 2024, compared to ₹8,274.29 lakhs in FY 2023.
  • Net Worth: The company’s net worth stood at ₹2,020.88 lakhs as of March 31, 2024.
  • Total Borrowing: The company’s borrowings increased from ₹3,183.2 lakhs in FY 2023 to ₹4,046 lakhs in FY 2024.

Recent Performance and Growth Prospects:

  • Forge Auto International has experienced steady financial growth, with significant improvements in both revenue and profitability over the past three years.
  • The company’s expanding asset base and improved net worth indicate a stronger financial position, poised to support further business growth.
  • With a growing focus on electric vehicle components and increasing demand from OEMs, Forge Auto International is well-positioned to capitalize on future market opportunities, potentially driving further revenue and profit growth.

Investment Risks and Opportunities

Potential Risks of Investing in the IPO:

  • Volatility in Raw Material Prices: Fluctuations in the cost of raw materials could adversely impact the company's profitability, making it vulnerable to market changes.
  • Auto Industry Slowdown: Any downturn in the automotive sector, either globally or domestically, may lead to reduced demand, directly affecting Forge Auto International’s revenue growth.
  • Client Dependency: The company’s reliance on a few key clients presents a risk of revenue concentration, which may pose challenges if there are disruptions in these client relationships or a reduction in their demand.

Opportunities and Growth Potential:

  • Expansion into EV Components: Forge Auto International is well-positioned to capitalize on the growing demand for electric vehicle (EV) components, opening new avenues for business growth.
  • Government Incentives: The company benefits from government policies that support manufacturing in India, providing a favorable environment for expansion and operational efficiencies.
  • Global Demand Growth: The rising global demand for Indian automotive components presents a strong opportunity for export growth, enabling the company to tap into international markets and drive future revenue.

Key Performance Indicator (KPI)

The following table summarizes key performance indicators for Forge Auto International as of March 31, 2024:

KPI

Values

Market Capitalization

₹117.94 Cr

Return on Equity (ROE)

35.76%

Return on Capital Employed (ROCE)

17.60%

Debt to Equity Ratio

1.94

Return on Net Worth (RoNW)

32.14%

Price to Book Value (P/BV)

4.17

PAT Margin

3.71%

Forge Auto International IPO Registrar

Registrar

Contact Information

Bigshare Services Private Limited

Tel No: +91-22 6263 8200, Email: ipo@bigshareonline.com

Forge Auto International IPO Lead Managers

Lead Manager

Contact Person

Email

Hem Securities Limited

Sourabh Garg

ib@hemsecurities.com

Conclusion

Forge Auto International's IPO provides an opportunity for investors to participate in the company's next phase of development. The company operates in the automotive components sector and has a notable presence in the market. As with any investment, potential investors should carefully assess the company's financials, market position, and risks before making any decisions regarding participation in the IPO.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

For All Disclaimers Click Here: https://bit.ly/3Tcsfuc

Frequently Asked Questions

What is the Forge Auto International IPO and why is it significant?

Answer Field

The Forge Auto International IPO is a book-built issue offering 2.88 million equity shares, aiming to raise ₹31.10 crores. It is significant as it provides investors an opportunity to invest in a auto components manufacturer listed on the NSE SME.

What is the price band for the Forge Auto International IPO, and how was it determined?

Answer Field

The price band for the IPO is set between ₹102 and ₹108 per share. It has been determined based on market demand, financial assessments, and discussions with the lead manager, Hem Securities.

What are the key risks and rewards of investing in the Forge Auto International Ltd IPO?

Answer Field

The risks include potential volatility in raw material costs and reliance on a few key clients. However, the company also presents opportunities with its expansion into electric vehicle components and a growing automotive market.

When will the Forge Auto International IPO shares be listed?

Answer Field

The Forge Auto International shares are expected to be listed on the NSE SME platform, with the tentative listing date set for October 4, 2024.

What documents should I review before investing in the Forge Auto International IPO?

Answer Field

Before investing, review the Red Herring Prospectus, financial statements, risk factors, and other relevant documents provided by the company for a thorough understanding of the IPO.

Will Forge Auto International IPO pay dividends?

Answer Field

The company's dividend policy will be determined based on its post-IPO financial performance. Investors should consult the company's future financial disclosures for updates on potential dividends.

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