Forge Auto International Ltd. has launched its initial public offering (IPO) on September 26, 2024, aiming to raise ₹31.10 crores through a fresh equity issue of 2.88 million shares, with a price band set between ₹102 and ₹108 per share. Investors can participate with a minimum investment of ₹129,600 for a lot size of 1,200 shares. Established in 2001, Forge Auto specializes in manufacturing safety-critical, precision-machined components for both automotive and non-automotive sectors, serving industries such as automobiles, tractors, and agricultural machinery.
₹12
₹108
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Expert Opinions
The Forge Auto International IPO has elicited cautious market sentiment, characterized by initial trading fluctuations that reflect investor concerns about the competitive automotive sector. The company’s strengths include its integrated manufacturing capabilities and a diverse product portfolio that serves both automotive and non-automotive industries, enhanced by established relationships with key OEMs.
However, potential risks and challenges include a limited customer base, which could lead to significant revenue fluctuations if key clients are lost. Additionally, the absence of binding agreements with customers may impact sales stability. In terms of valuation analysis, the IPO price band of ₹102 to ₹108 per share appears reasonable given the company’s historical performance and growth trajectory, with revenue increasing from ₹13,287.85 lakhs in FY2022 to ₹18,011.72 lakhs in FY2024. The long-term investment perspective is cautiously optimistic, as Forge Auto International is positioned to benefit from increasing demand in the automotive sector, but ongoing market conditions should be monitored closely.
Investor Considerations
Investors considering the Forge Auto International IPO should evaluate several key aspects. The company performance and fundamentals are solid, with revenue growth from ₹13,287.85 lakhs in FY2022 to ₹18,011.72 lakhs in FY2024, indicating a strong operational foundation. The sector outlook for automotive components is favorable, driven by increasing demand for vehicles and advancements in manufacturing technologies.
In terms of IPO valuation, the price band of ₹102 to ₹108 per share appears reasonable based on the company’s financial trajectory and market positioning. The growth prospects are promising, supported by plans to expand production capacity and enhance product offerings in both automotive and non-automotive sectors. However, potential risk factors include dependence on a limited customer base and fluctuations in industry performance, which could impact revenue stability. A long-term investment horizon is advisable, as Forge Auto International is well-positioned to capitalize on emerging trends in the automotive sector, making it a potentially rewarding investment opportunity.
| Date | GMP | Trend |
|---|---|---|
| 30 Sep 2024 13.33 | ₹12 | Down |
| 28 Sep 2024 12.02 | ₹22 | --- |
FAQs
The Grey Market Premium showed moderate accuracy in predicting Forge Auto International’s listing performance. While the GMP of ₹12 predicted a premium of 11.11% over the issue price, the actual listing delivered a more modest 4.63% gain. With a prediction error of 5.83%, the GMP correctly predicted the positive listing direction but overestimated the magnitude of gains, demonstrating partial reliability as a directional indicator in this case.
Forge Auto International IPO Current GMP is ₹22.
Forge Auto International IPO Expected Returns is 20.37%.
Forge Auto International IPO estimated listing price is ₹130.