The Mumbai-based startup’s IPO, which opens on June 26, comes as the Indian drone making industry gathers a variety of tailwinds, from the finalisation of the Drone Rules, 2021 last year that ended years of regulatory uncertainty to the government’s production-linked incentives scheme meant for indigenous drone manufacturers and service providers.
The company will have a market capitalisation of Rs 2,800 crore at the upper price band. Investors can bid for a minimum of 22 shares and in multiples of 22 shares thereafter.
Ideaforge is looking to raise about Rs 240 crore through the issuance of fresh shares. The remaining proceeds will go to its stakeholders who are selling shares.
The company, among the pioneers in the country’s unmanned aerial vehicle market, said it would use Rs 50 crore from the proceeds to repay debt, Rs 135 crore as working capital and Rs 40 crore for product development.
Executives in the drone-making industry said a successful IPO from Ideaforge may bring in much needed capital into the sector, especially in the growth stage where venture capital funds and private equity investors have so far held back from making big-ticket investments.
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“Innovation is just one aspect, but that has to be converted into results. Unfortunately, in the drone sector, funding often follows results and not the other way around, but given the capital-intensive nature of the business, it becomes a bit of a chicken and egg problem,” Ideaforge chief executive Ankit Mehta told ET.Founded by Mehta and his IIT-Mumbai colleagues Rahul Singh, Ashish Bhat and Vipul Joshi, the 16-year-old firm has grown to become one of the country’s largest drone manufacturers. It reported operating revenue of Rs 186 crore in fiscal year 2023, as per disclosures made in its IPO filings.
ETtechMehta said about 70% of the firm’s revenue comes from the defence sector, while about 20% is generated from civil sector clients like police forces and other government agencies.
Funding for drone manufacturers has not always been easy as the reliance of the industry on a few major customers or sectors has kept growth-stage VC and PE funds from investing in it, a senior executive in the industry told ET on condition of anonymity. Slow payment processing by government entities has also put off major investors looking for high growth rates, he added.
When asked about diversification, Mehta said: “I don’t think anyone has seen a great future by killing the golden goose … You don’t want a major customer who is willing to scale with you to descale just for the sake of diversification, so it makes more sense for other industries to mature and catch up.”
Beyond offering seven types of drones, Ideaforge provides software solutions for activities like autopilot, as well as in geographic information systems and surveillance. It counts Adani Defence & Aerospace, Asteria Aerospace Pvt Ltd and Lockheed Martin Corp among its competitors. “We don’t see competition as a monolithic block, different firms are competing with us for our various drones,” Mehta said.
(Graphics by Rahul Awasthi)