“Backed by the government, IdeaForge's pioneering UAVs dominate India's skies and markets, with a recent IPO that echoed its impressive success”

  1. About IdeaForge
    1. IdeaForge builds unmanned aircraft systems (UAS)
    2. In India, the company has the largest operational deployment of indigenous UAVs, with an ideaForge-manufactured drone taking off every five minutes for surveillance and mapping.
    3. Their customers have completed over 350,000 flights using our UAVs.
    4. According to a report published in December 2022 by Drone Industry Insights, ideaForge ranked 7th globally in the dual-use category (civil and defense) drone manufacturers.
      5. References :
       
  1. Pioneer and the Pre-Eminent Market Leader
    1. IdeaForge has approximately 50% of the market share in India.
    2. The company started its operations back in 2007 with a first-mover advantage.
      3. References :
       
  1. Market Opportunities
    1. IdeaForge works in the Drone Technology sector, which is, poised for exponential growth worldwide.
    2. India finds itself at a critical juncture in the evolutionary timeline of drone technology and aims to position itself as a global drone hub by 2030
    3. The global drone sector is expected to grow at a CAGR of 20% to be approximately US $51.4 billion in 2027 and further leap to approximately US $91.3 billion by 2030
    4. The Indian drone market is projected to grow from US $43 million by Fiscal 2022 to US $812 million by Fiscal 2027, exhibiting a growth CAGR of 80% over fiscals years 2022-2027
    5. The usage of drones in both the civil and defence sectors is rising
      6. References :
       
  1. Varied Product Portfolio
    1. The company has two sets of customers : civil and defence
    2. They produce the following :
      1. Hardware
          • Primarily includes UAVs, payloads, batteries, chargers, and a communication system (which enables communication between the ground control station and the UAVs)
          • A broad range of products with feature-based differentiation such as weight class (approximately 2-7 kg), endurance class (25-120 minutes flying time), take-off altitude range (up to 6,000 metres), communication range (approximately 2-15 km), payload types, etc.
          • They also undertake full integration of our payloads, communication systems, and packaging
          • Their products have experienced all kinds of conditions - from Ladakh’s cold to Thar’s heat
      2. Software
          • Protects the UAVs with several fail-safe features against communication failure, high wind velocity, low battery, battery imbalance, and extreme temperature, among others.
          They have 2 main software packages namely :
          • BlueFire Live! : It enables secure and live streaming of the UAV video feed and also allows payload control from a remote command location.
          • BlueFire Touch : BlueFire Touch is a Ground Control Software (GCS). It is built to plan and command both mapping and surveillance missions, with the ability to pre-plan missions based on operational area and target locations via waypoint-based navigation.
      3. Solutions
          • They constantly endeavour to innovate enterprise specific solutions by introducing new products and solutions for their customers.
          • Example : Their RYNO UAV provides mapping solutions, and, Q4i, NETRA V4+, and SWITCH UAVs, provide surveillance and disaster relief solutions to their customers for different operating environments and applications.
      References :
       
  1. Manufacturing
    1. Their manufacturing facility is located in Navi Mumbai - they produce composite structures of their UAV airframes and small component machining, whereas they source commercial-off-the-shelf (“COTS”) and customized components required for the manufacturing of UAVs such as carbon tubes, propellers, and cameras from the domestic as well as the international market
      2. References :
       
  1. Strong Customer Base
    1. The company has a diverse customer base of 265 customers
    2. They do not engage in long term contracts, but they do have good relationships with long-term customers
    3. About 35% of their total customers are repeat customers
      4. References :
 
  1. Very High Sales in the last 2 years
    1. Since they have customers from both, civil and defence, here is the revenue breakup
        2. notion image
      References :
 
  1. Loss in 2021
    1. The company incurred a loss of ₹ 146.26 million in Fiscal 2021
    2. The shares may suffer greatly if this occurs again.
      3. References :
 
  1. The company and industry are backed by the Government
    1. The government has launched several policies for drones and drone components in India
    2. The objective of this scheme is to incentivise the manufacturing of drones and drone components in India in order to make the manufacturing sector self-sustaining and globally competitive (IdeaForge imports a lot of its raw materials and is heavily dependent on other countries)
    3. Several government policies also work in their favour, but since this is a sensitive industry, new policies can come up anytime, damaging the company’s revenue source of eventually
    4. As mentioned above in Point 6, the majority of the revenue for IdeaForge comes from the Central and State governments (if the government reduces its budget for the same, the revenue will take a blow)
      5. References :
 
  1. Cash Flow Statement
      2. (Rs m)
      FY19
      FY20
      FY21
      FY22
      FY23
      From Operations
      -135
      -165
      -308
      665
      -532
      From Investments
      215
      48
      -68
      -308
      -1,489
      From Financial Activity
      -57
      12
      428
      -106
      1,762
      Net Cashflow
      24
      -105
      52
      252
      -259
      References :
       
  1. Ratio / Financial Analysis
      2. FY19
      FY20
      FY21
      FY22
      FY23
      Operating Profit Margin (%)
      -48.9
      -88.4
      -30.6
      46.8
      25.8
      Net Profit Margin (%)
      -56.5
      -96.0
      -42.1
      27.6
      17.2
      Debt to Equity Ratio (x)
      0.0
      0.0
      0.7
      0.0
      0.0
      References :
 
  1. Company’s Financials
      2. (Amount in ₹ Crores)
      Particulars
      Mar 2019
      Mar 2020
      Mar 2021
      Mar 2022
      Mar 2023
      Share Capital 
      0
      0
      0
      0
      21
      Reserves
      81
      68
      60
      122
      303
      Borrowings 
      3
      5
      65
      48
      101
      Other Liabilities 
      6
      5
      13
      42
      63
      Total Liabilities
      90
      79
      139
      212
      488
      Fixed Assets 
      4
      0
      0
      0
      49
      CWIP
      9
      0
      0
      0
      25
      Investments
      24
      12
      0
      11
      125
      Other Assets 
      53
      67
      124
      201
      289
      Total Assets
      90
      79
      124
      21
      488
      References :
       
      (Amount in ₹ Millions)
      Particulars
      Mar 2021
      Mar 2022
      Mar 2023
      Total Equity
      597.48
      1,633.03
      3,247.21
      Total Non-Current Liabilities
      396.84
      118.47
      137.80
      Total Current Liabilities
      243.09
      471.81
      1,494.29
      Total Equity and Liabilities
      1,237.41
      2,223.31
      4,879.30
      Total Non-Current Assets
      423.35
      787.18
      1,042.37
      Total Current Assets
      814.06
      1,436.13
      3,836.93
      Total Assets
      1,237.41
      2,223.31
      4,879.30
      References :
       
  1. IdeaForge IPO
      2. IPO Date
      Jun 26, 2023 to Jun 30, 2023
      Listing Date 
      Jul 7, 2023
      Face Value
      ₹10 per share
      Price
      ₹638 to ₹672 per share
      Lot Size
      22 Shares
      Total Issue Size
      8,441,764 shares (aggregating up to ₹567.29 Cr)
      Fresh Issue 
      3,572,052 shares (aggregating up to ₹240.00 Cr)
      Offer for Sale
      4,869,712 shares of ₹10 (aggregating up to ₹327.25 Cr)
      Market Cap
      ₹ 4,598 Cr.
      Current Price
      ₹ 1,104
      High / Low
      ₹ 1,344 / 1,095
      References :
       
      notion image
      References :
 
  1. Key Performance Indicator
      2. KPI
      Values
      P/E (x)
      87.5
      Market Cap (₹ Cr.)
      2800.2
      ROE
      13.11%
      ROCE
      12.51%
      Debt/Equity
      0.27
      EPS (Rs)
      8.12
      RoNW
      9.85%
      References :
 
  1. Objects of the Issue
      2. The company intends to utilize the net proceeds from the issue towards the funding of the following objects :
      1. Repayment / prepayment of certain indebtedness availed of by the company
      1. Funding working capital requirements
      1. Investment in product development
      1. General corporate purposes.
      References :
 
  1. Subscription
    1. The ideaForge Technology IPO was subscribed 106.06 times on June 30, 2023 at 7:02:00 PM.
    2. The public issue was subscribed 85.20 times in the retail category, 125.81 times in the QIB category, and 80.58 times in the NII category
      3. References :
 
→ Company Socials :

Summary

  1. Impacts of IdeaForge
    1. IdeaForge's UAV technology has contributed to advancements in surveillance, mapping, and disaster relief efforts, with potential positive impacts on various industries and public safety.
    2. The company's growth contributes to India's goal of becoming a global drone hub, potentially driving economic growth, job creation, and technological innovation.
    3. IdeaForge's successful IPO and high subscription rates indicate investor confidence in its future prospects, potentially leading to increased investments in the drone technology sector.
    4. IdeaForge's involvement in defense-related UAVs contributes to India's defense capabilities, aiding in border surveillance and security operations.
    5. The company's dominance and innovation in the UAV market might inspire competitors to invest more in research and development, ultimately fostering healthy industry competition
      6.  
  1. Why should one invest in IdeaForge?
    1. IdeaForge is the dominant player in India's UAV market with around 50% market share and a pioneering position since its establishment in 2007.
    2. IdeaForge offers a wide range of unmanned aircraft systems (UAS) for both civil and defense sectors, including hardware, software, and solutions tailored to specific customer needs.
    3. The company benefits from government policies promoting drone technology, positioning itself to capitalize on the growing drone industry and aiming to be a global drone hub by 2030.
    4. With a diverse customer base of 265 clients and approximately 35% repeat customers, IdeaForge enjoys stable relationships and consistent demand.
    5. The company has demonstrated impressive sales growth, particularly in recent years, and its IPO was oversubscribed, reflecting strong investor interest and confidence.
      6.  
  1. Why should one not invest in IdeaForge?
    1. A significant portion of IdeaForge's revenue is derived from government contracts. Any changes in government policies or budget allocation could affect its revenue stream.
    2. The company's cash flow has been inconsistent, with negative values in some years, indicating potential challenges in managing operational expenses and investments.
badge