Forge Auto International is set to launch its IPO from September 26 to September 30, 2024, with a total issue size of ₹31.10 crore. The company specializes in forging and manufacturing safety-critical components for various industries, particularly the automotive sector.
About Forge Auto International
Founded in 2001, Forge Auto International operates in the engineering sector, focusing on forging and manufacturing a range of safety-critical components. Its product offerings include:
- Automotive Components: Used in the production of vehicles, including tractors and commercial vehicles.
- Non-Automotive Components: For applications in agriculture, industrial machinery, and tools.
The company serves a diverse clientele, primarily comprising domestic and global original equipment manufacturers (OEMs).
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Strengths and Competitive Advantages
- Advanced Manufacturing Facilities: Forge Auto International boasts state-of-the-art machinery, including:
- Medium-frequency induction heating equipment
- CNC machines
- Vertical milling centers (VMCs)
- Hydraulic surface grinders
- HMI screw presses
- Quality Certifications: The company is certified under:
- ISO 9001:2015 for quality management
- ISO 14001:2015 for environmental management
- OHSAS 45001:2018 for occupational health and safety
- IATF 16949:2016 for automotive quality management
- ZED GOLD certification from the Government of India for sustainability
- Consistent Revenue Growth: Forge Auto International has seen a steady increase in revenue and profit over the past few years, with revenue from operations rising from ₹132.88 crore in FY22 to ₹180.12 crore in FY24.
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Risks and Challenges
Despite its strengths, Forge Auto International faces certain risks:
- Customer Concentration: The top 10 customers contributed 85.16% of revenue in FY24. Any loss or decrease in business from these clients could significantly affect revenue.
- Debt Levels: As of March 31, 2024, the company had ₹40.46 crore in outstanding borrowings. Challenges in servicing these loans could impact financial stability.
- Industry Dependence: Forge Auto’s performance is closely linked to the automotive and machinery industries. Any disruptions in these sectors could negatively affect its operations.
- Single Manufacturing Facility: The company relies on its Punjab facility for production. Disruptions at this site could impact its ability to meet orders.
Financial Overview
Forge Auto International has demonstrated solid financial performance over the past three fiscal years:
| Financial Metric | FY22 | FY23 | FY24 |
|---|---|---|---|
| Revenue (₹ Cr) | 132.88 | 176.65 | 180.12 |
| Total Assets (₹ Cr) | 56.78 | 82.74 | 101.00 |
| Profit After Tax (₹ Cr) | 2.64 | 4.96 | 6.69 |
Key Performance Indicators (KPI)
| Metric | Value |
|---|---|
| Return on Equity (ROE) | 35.76% |
| Return on Capital Employed (ROCE) | 17.60% |
| Debt/Equity Ratio | 1.94 |
| Return on Net Worth (RoNW) | 32.14% |
| Price-to-Book Value (P/BV) | 4.17 |
| Profit After Tax Margin | 3.71% |
IPO Application Details
The IPO is available within the price range of ₹102 to ₹108 per share. Investors can apply with a minimum lot size of 1,200 shares, which corresponds to a minimum investment of ₹129,600 for retail investors.
| Application Type | Price Band | Apply Upto |
|---|---|---|
| Regular | ₹102 – ₹108 | ₹2 Lakh |
| High Networth Individual (HNI) | ₹102 – ₹108 | ₹2 – 5 Lakh |
Forge Auto International IPO Lot Size
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 1200 | ₹129,600 |
| HNI (Min) | 2 | 2400 | ₹259,200 |
IPO Promoter Holdings
Promoters Parmod Gupta and Rajan Mittal currently hold 100% of the company’s shares, which will decrease to 73.63% post-issue.
Objectives of the IPO
The funds raised through the IPO are proposed to be utilized for:
- Working Capital: To meet operational requirements.
- Debt Repayment: To pay off specific borrowings.
- General Corporate Purposes: Covering general corporate expenses.
IPO Details
| IPO Date | September 26, 2024 – September 30, 2024 |
|---|---|
| Face Value | ₹10 per share |
| Price Band | ₹102 to ₹108 per share |
| Lot Size | 1200 Shares |
| Total Issue Size | 2,880,000 shares (₹31.10 Cr) |
| Fresh Issue | 2,880,000 shares (₹31.10 Cr) |
| Issue Type | Book Built Issue IPO |
| Listing At | NSE SME |
Analyst Review
According to Dilip Davda, Forge Auto International has shown steady growth in revenue and profits, positioning itself well in the manufacturing of complex forged components. The issue appears fully priced based on FY24 earnings. Investors looking for moderate long-term gains may consider applying to this IPO.
Conclusion
Forge Auto International presents a solid opportunity for investors interested in the manufacturing sector, particularly in safety-critical components for the automotive and non-automotive industries. However, potential investors should be aware of the risks associated with customer concentration and industry dependence.
For additional information, you can contact the IPO registrar:
Bigshare Services Pvt Ltd
Phone: +91-22-6263 8200
Email: ipo@bigshareonline.com
Website: Bigshare IPO Status
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