Drone Destination IPO lists at 65.31% premium, tapers later

Strong listing for Drone Destination IPO, but fails to hold on

Drone Destination IPO had a strong listing on 21st July 2023, listing at a sharp premium of 65.31%, but subsequently losing ground and closing at the 5% lower circuit over the listing price. Of course, the stock still closed comfortably above the IPO issue price. In a sense, the markets came under pressure as the Nifty fell by 234 points on the day and the Sensex fell by 888 points for the day on 21st July 2023. It was more about weekend profit booking as traders chose to stay light ahead of the weekend and after a very strong rally in the markets when the market had almost touched the threshold of 20,000 on the Nifty. However, despite such a weak day of trading, the listing of the stock was at a smart premium of 65.31% although it could not sustain the gains for the day and closed at the lower circuit for the day.

Drone Destination IPO did show a lot of strength on opening and tried to hold higher. However, the pressure of the market overall was just too much to handle. The stock closed above the IPO prices issue price but it tapered below the listing price to close at 5% lower circuit on the listing price of the stock. Being an NSE SME IPO, it is only traded on the SME segment of NSE. Drone Destination Ltd opened 65.31% higher and the opening price turned out to be very close to the high price for the day. With subscription of 250.09X for the retail portion, 243.85X for the HNI / NII portion and 50.46X for the QIB portion; the overall subscription was extremely healthy at 191.65X. The subscription numbers were so strong that it allowed the stock to list at a huge premium even on a day when the market sentiments were very weak. However, it could not sustain the gains for the day as the selling pressure on the market was quite strong.

Stock closes Day-1 at substantial premium

Data Source: NSE

Drone Destination IPO was priced in the price band of ₹62 to ₹65 via the book building format. On 21st July 2023, the stock of Drone Destination Ltd listed on the NSE at a price of ₹107.45, a premium of 65.31% on the IPO issue price of ₹65. Not surprisingly, the price was discovered at the upper end of the band for the IPO. However, the stock faced pressure and could only traverse briefly above the listing price as it closed the day at a price of ₹102.10, which is 57.08% above the IPO issue price but -5% below the listing price of the stock on the first day of listing. In a nutshell, the stock of Drone Destination Ltd had closed the day exactly at the lower circuit price for the stock of 5% with only sellers and no buyers. Like the upper circuit price, even the lower circuit price on listing day is calculated on the listing price and not on the IPO price. The opening price actually turned out to be very close to the high price of the day. Here is the pre-open price discovery for the SME IPO of Drone Destination Ltd on the NSE.

How prices traversed for Drone Destination IPO on listing day

On Day-1 of listing i.e., on 21st July 2023, Drone Destination Ltd touched a high of ₹107.95 on the NSE and a low of ₹102.10 per share. The high price of the day was marginally above the opening price of the stock while the stock closed at the low point of the day, which also represents the lower circuit of 5%. Incidentally, the closing price represented the 5% lower circuit price of the stock for the day, which is the maximum that the SME IPO stock is allowed to move in the day. What is truly appreciable is that the stock closed strong despite the overall Nifty falling by over 234 points on 21st July 2023 and dipping below the psychological level of 19,800 on a closing basis for the listing day. The stock closed at the 5% lower circuit with 10,000 sell quantity and no sellers. For the SME IPOs, 5% is the upper limit and also the lower circuit on the listing price on the day of listing.

Robust volumes for Drone Destination IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Drone Destination Ltd stock traded a total of 22.40 lakh shares on NSE SME segment amounting to value of ₹2,369.47 lakhs on the first day.  The order book during the day showed a lot of selling with the sell orders consistently exceeding the buy orders at any point of time. That also led the stock to close at the lower end of the circuit filter. It must be noted here that Drone Destination Ltd is in the trade to trade (T2T) segment so only delivery trades are possible on the stock. Hence the entire volume for the day purely represents the delivery volumes.

At the close of Day-1 of listing, Drone Destination Ltd had a market capitalization of ₹248.10 crore with free-float market cap of ₹49.62 crore. It has a total of 243 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 22.40 lakh shares during the day is accounted for only by delivery trades.

Brief on the business model of Drone Destination Ltd

Drone Destination is a DGCA-authorized Remote Pilot Training Organization. Along with its sister company, Hubblefly Technologies, they have jointly developed an integrated drone eco-system built around drone manufacturing, certified training, services, and rent a drone services. Drone Destination Ltd is headquartered in New Delhi and backed by a well-experienced team of Aviation & Drone Experts with a combined experience of over 350 man years. Its flagship training centre is located at Manesar in Gurugram.

Drone Destination Ltd runs the largest network of DGCA-certified Drone Pilot Training Programs and has trained over 1,000 drone pilots; a unique record. It operates 8 Drone Hubs and plans to open another 150 Drone Hubs, over the next three years. These drone hubs will offer drones on rent, with certified pilots, drone enterprise solutions, repair, and maintenance support as well as specialised training. It has currently deployed 25 drone teams for conduct village level mapping across 3 major states of UP, Gujarat and Andhra Pradesh. Drone Destination plans to strongly reinforce the “Make in India” foothold within the burgeoning UAV industry.