"Exploring the IdeaForge IPO: Should you subscribe?"

"Exploring the IdeaForge IPO: Should you subscribe?"

Many of us are familiar with the movie "3 Idiots," and one memorable scene that resonated with viewers was when "Virus" dismissed the idea of drones. The film even featured a prototype of a drone. In reality, this concept of business was brought to life by the visionary minds of Ankit Mehta, Ashish Bhat, Rahul Singh, and Vipul Joshi, graduates from IIT Bombay. Back in 2007, they founded IdeaForge, which has now become India's largest drone manufacturing company and market leader in Unmanned Aircraft system with more than 50% market share.

Excitingly, IdeaForge is currently preparing for an Initial Public Offering (IPO) with an issue size of Rs. 567 Cr. This move highlights their ambition and growth in the industry. Notably, IdeaForge caters to both civil and defense sectors, earning a reputable position with the support of industry giants such as Infosys and Qualcomm. Their innovative drones have made a significant impact, and their journey continues to captivate enthusiasts and industry experts alike.

Why the company is getting listed?

This is the first question one should ask . As per the company's statement, the proceeds from the recent issuance allocated as follows: Rs 50 crore will be utilized for debt prepayment, Rs 135 crore will be allocated to maintain the working capital, and Rs 40 crore will be used for product development purposes.

The reasons appear to be fair, and debt prepayment can be viewed as a positive step towards reducing interest expenses and enhancing the company's financial health. In the Pre-IPO round, the company has already raised 60 Crore from companies such as Motilal Oswal, Tata AIG Insurance, and 360 One Asset Management.

IPO Details

IPO Details

Issue Period 26th June - 29th June 2023
Price Band ₹638 - ₹672
Minimum Bid Quantity 22 shares and multiples thereof
Finalization of Allotment 4th July 2023
Initiation of Refunds 5th July 2023
Credit of Shares 6th July 2023
Date of Listing 7th July 2023
Mandate End Date 14th July 2023
Anchor Investors Lock-In End Date 29th July 2023
Issue Size ₹567 crore
Qualified Institutional Buyers 75% (of the issue size)
Non-Institutional Buyers 15% (of the issue size)
Retail Shares Offered 10% (of the issue size)
Face Value ₹10 per share

About the Industry

The global military expenditure in CY21 was USD 2.1 trillion, with the USA accounting for the highest share of 38%. India's military expenditure of US$ 76.6 billion in CY21 was the third-highest in the world. India's spending increased by 0.9% from CY20 and by 33% from CY12. India has prioritized the modernization of its armed forces amid ongoing tensions and border disputes with China and Pakistan, which occasionally escalate into armed clashes.

Global drone industry is growing almost at a rate of 20% and might become 51.4Billion USD by 2027.

It has been estimated that by 2030, India's drone market will reach nearly 2.5 trillion Indian rupees. The defense sector is projected to be the biggest contributor to the drone market by 2030. With the aim of becoming a global drone hub by 2030, the Indian government has intensified efforts to establish a sustainable drone manufacturing ecosystem in the country.

Drones are used in defense for longer flight times, improved ranges, quality cameras, and intelligent systems that offer the welfare of people by providing better surveillance, reduced costs, minimized human capital loss, and increased convenience and flexibility.

Lately, we have witnessed the utilization of drones in significant geopolitical events such as the Russia-Ukrainian War, the USA drone strike that resulted in the death of al-Qaeda leader Ayman al-Zawahiri in Kabul, Afghanistan, the attack on an oil refinery in Saudi Arabia, and the drone intrusion between India and Pakistan.

Some of the civil use cases would include agriculture drones, enabling farmers to gather information that aids in crop health management, crop treatment, crop scouting, irrigation, field soil analysis, and crop damage assessments. Media film directors are utilizing drones to capture aerial shots and aerial photography.

Under the SVAMITVA scheme of Govt. of India, the surveying and mapping of rural properties are conducted using modern technology such as drones and other surveying techniques. Other uses are mining, public safety, logistics, Bridge inspection, Property inspection, etc. The usage of drones in theses sectors will increase at CAGR ranging from 12% to 30%.

About the Company

IdeaForge is the first to introduce the concept of drones and is the pre-eminent market leader in the Indian Unmanned Aircraft System or "UAS" market, which refers to aircraft that are autonomously and remotely operated without any direct human intervention from within or on the aircraft.

"They have a market share of approximately 50% in Fiscal Year 2022, according to the 1Lattice Report. This achievement also positions them as the largest operational deployment of indigenous UAVs(Unmanned Aerial Vehicles) in India. Additionally, they were ranked 7th globally among dual-use category drone manufacturers (civil and defense) in a report published by Drone Industry Insights in December 2022."

According to a report by 1Lattice, their customers have completed over 300k flights, and on average, an IdeaForge-manufactured drone takes off every 5 minutes for surveillance and mapping.

They not only manufacture drones but also provide the software to operate them. IdeaForge was the first company to indigenously develop and manufacture vertical take-off and landing ('VTOL') UAVs in India in 2009. Additionally, they were the first company to participate in the 5G-enabled UAVs at the Indian Mobile Congress in 2018. Idea Forge stands out as one of the few original equipment manufacturers (OEMs) globally to have its own proprietary autopilot sub-system and ground control software.

Due to their continuous research and development efforts, they have already filed 62 patent applications, out of which 34 were filed internationally, and 28 patents were filed in India. In March 2022, one of their products, "SWITCH UAV," secured the largest mini-VTOL UAV contract, defeating global competitors from Russia, Israel, France, Ukraine, and other countries.

What is the revenue split and major segments?

By 2023

The majority of the revenue comes from the defense sector. Over the past few years, the government has been focusing extensively on "Atma Nirbhar Bharat," as a result of which India's Defense department has started procuring indigenously developed defense equipment. This development proved highly beneficial to the company, particularly in FY2022, when the government allocated a significant defense budget.

In 2023, if we observe the order book size from the defense sector, it amounts to 1852 million rupees, whereas the order book from the civil segment is 71 million rupees.


The company is highly focused on product innovation and expanding its product portfolio in accordance with the needs of end-use applications.

Source: IdeaForgeIPO DRHP

These are some of the hardware products designed and developed by IdeaForge. They also offer software and solutions products such as BlueFire Touch, Autopilot, BlueFire MapAssist, BlueFire Live, Surveillance Pro, and Geographic Information System (GIS) Pro.

Financials of the Company

FY 2021FY 2022Six Months ended September 30, 2022
SectorRevenue (in Cr.)% to RevenueRevenue (in Cr.)% to RevenueRevenue (in Cr.)% to Revenue
Total 34.72100159.44100139.54100

The financials says that more than 90% of their revenue comes from Defence sector also the promotors say that they are trying to increase the revenue generation from Civil sector.

Revenue and PAT?

ParticularsFy 2021Fy 2022Fy 2023
EBITDA(Operating Profit)-9.2575.1357.49
Operating Profit Margin (%)-26.6547.1230.91
Net Profit -14.6344.0131.99
Net Profit Margin(%)-42.1327.617.2

The significant decline in the profit of Idea Forge in FY 2021 was primarily due to the impact of the Covid-19 pandemic. However, in FY 2022, the company's financials rebounded strongly, driven by high demand from the defense sector.


The ROCE of the company is at 12.51% in FY 2023 and ROE of 13.11%.


  • Import Dependency:-The materials/components (carbon fiber tubes, motors, propellers) used in the manufacturing of the drone come from imports from global vendors. Any disruption in the supply chain can affect production.
  • Current debt stands at 85 crore and 50 crore will be paid off after the listing.
  • Rising Competition in the domestic as well as international market


We are not a SEBI registered Investment Advisor. This is not a recommendation but only a case of sample analysis that might help you to do research on various Mutual Funds.


In summary, IdeaForge is the leading player in the Indian UAS industry, benefiting from its first-mover advantage, diversified product portfolio, and strong customer relationships. The company has a robust technology stack and in-house capabilities for product development, design, and delivery. It enjoys growing profits and advantages throughout the value chain, including approvals, referrals, and a commercial setup. Factors such as the ban on imports, production-linked incentives, and anti-China sentiment further contribute to its market position. Overall, IdeaForge is well-positioned to capitalize on the expanding opportunities in the Indian UAS industry.

After analyzing the business fundamentals and financials, we found it worthy of subscription.

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