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ideaForge Technology Limited
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About Business
Incorporated in 2007, ideaForge Technology Limited is engaged in the business of manufacturing Unmanned Aircraft Systems (UAS).
The company manufactures Unmanned Aircraft Vehicles for Mapping, Security & Surveillance. These drones are capable of a wide range of mining area planning, and mapping applications. ideaForge UAVs help construction and real estate boost their operations. They also assist defense forces in conducting Intelligence, Surveillance, and Reconnaissance (ISR) operations along borders.
ideaForge has two main software, namely:
The company is a market leader in the Indian Unmanned Aircraft Systems ("UAS") market with a market share of approximately 50% in fiscal 2022. It has the largest operational deployment of indigenous UAVs across India, with an ideaForge-manufactured drone taking off every five minutes for surveillance and mapping on average.
The company has been ranked 7th globally in the dual-use category (civil and defense) drone manufacturers as per the report published by Drone Industry Insights in December 2022.
Business Overview & Highlights
ideaForge Technology Limited ("ideaForge") was incorporated on February 8, 2007. ideaForge is the pioneer and the pre-eminent market leader in the Indian unmanned aircraft systems (“UAS”) market, with a market share of approximately 50% in Fiscal 2022. They had the largest operational deployment of indigenous UAVs across India, with an ideaForge manufactured drone taking off every 5 minutes on average for surveillance and mapping as of Fiscal 2023.
ideaForge ranked 7th globally in the dual-use category (civil and defence) drone manufacturers as of December 2022. They have grown at a CAGR of 137.47% in terms of revenue from operations over the last 3 Fiscals, with a Return on Capital Employed of 12.51% in Fiscal 2023.
They have 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 meters), communication range (approximately 2-15 km), payload types, etc.
Company’s product portfolio consists of Hardware, Software and embedded sub-systems and Solutions. Their growth over the years is attributable to their indigenous design and technological capabilities, ability to invent, design and deliver customer centric offerings (i.e., hardware, software, and solutions) and their vertically integrated operations.
in addition to being among the 1st few players in India to enter the UAV market, ideaForge also has the distinction of being the 1st company to indigenously develop and manufacture vertical take-off and landing (“VTOL”) UAVs in India in 2009. They are also the 1st company to participate in the demonstration of 5G enabled UAVs at the Indian Mobile Congress in 2018.
‘SWITCH UAV’ – company’s product, won the largest mini-VTOL UAV contract in March 2022, against global competitors.
Beyond the UAVs, ideaForge undertake a full integration of their payloads, communication system and packaging. ideaForge also build their own software stack required for flight safety, autopilot sub-system, battery, power, and communication in their UAVs.
ideaForge has raised funding from various investors including Infosys Ltd, Qualcomm Asia Pacific Pte. Ltd., Celesta Capital II Mauritius, Celesta Capital II-B Mauritius, Florintree Enterprise LLP, Export Import Bank of India and Infina Finance Pvt Ltd over the years.
A graphical representation of our evolution and growth is set forth below.
Products and Solutions
Company's Customer Overview
As of May 31, 2023, ideaForge has served approximately 265 customers. Their customers include Indian defence customers and civil customers comprising certain of the central armed police forces, state police departments, disaster management forces, forest departments, private contractors in connection with smart cities, Pioneer Foundation Engineers Pvt Ltd, and C.E. Info Systems Ltd.
Segmental Overview
Growth in revenue and profitability
Company's growth in revenue and profitability can be credited to our robust product portfolio and technology differentiation, which we achieve through continuous product development, and streamlining of our operational activities. We have been able to achieve revenue from operations of ₹ 139.99 million in Fiscal 2020 and ₹1,594.39 million in Fiscal 2022, which is an increase of over 11.39 times of revenue achieved in Fiscal 2020. Set forth below are certain key financial information from our business.
Manufacturing Facility
The company undertakes their manufacturing operations at their manufacturing facility, situated in Navi Mumbai, Maharashtra which has an area of approximately 21,000 sq. ft., and is equipped with advanced equipment, modern technology and automation systems to manufacture a wide range of products.
Industry Market Opportunity and Regulations
Drone technology is a sunrise sector, poised for exponential growth worldwide (Source: 1Lattice Report). Today, drones are used in a wide variety of defence and civil applications that are growing across industries (Source: 1Lattice Report). India finds itself to be at a critical juncture in the evolutionary timeline of drone technology and aims to position itself as a global drone hub by 2030 (Source: 1Lattice Report). The global drone industry is estimated to be US$ 21.1 billion in 2022 (Source: 1Lattice Report). The industry has witnessed a significant growth at a CAGR of 19% over 2018-2022 and is expected to grow even faster 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 (Source: 1Lattice Report). As of 2022, the potential market size for the Indian drone industry was approximately US$ 2.71 billion (Source: 1Lattice Report). In 2022, defence industry has the highest potential of US$ 1.28 billion out of the total drone market, followed by logistics at US$ 0.76 billion and enterprise at US$ 0.48 billion (Source: 1Lattice Report). 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 2022-2027 (Source: 1Lattice Report).
Major drivers behind drone industry growth are industry favorable policies, increased demand for monitoring and surveying, cost-effective data collection, and introduction of new use cases such as utilities inspection and search and rescue operations (Source: 1Lattice Report). By implementing drone indigenization initiatives in use cases such as defence, commercial, homeland security, and counter UAV sectors, India has the remarkable opportunity to target approximately 1.8 lakh crore of total domestic manufacturing potential. (Source: 1Lattice Report). The rise of the drone manufacturing industry in India will result in significant trickle-down effects across the subcomponent value chain, right across motors/ propulsion systems, payloads, communication modules, batteries/ power systems, propellers, assembly, navigation systems, airframes and software solutions (Source: 1Lattice Report).
The rapid increase in the production scale of Chinese drones led to a rise in unreliability and performance issues (Source: 1Lattice Report). The data confidentiality issues and low reliability of Chinese drones, coupled with the global anti-China sentiments, are paving an opportunity for the Indian drone industry to provide an alternative option in the market (Source: 1Lattice Report). Indian UAVs can compete in this market given the favorable ecosystem created by the government’s industry-friendly policies, significant investments, and increasing demand for drones globally (Source: 1Lattice Report). Through meticulous public and private investments, the Indian drone sector is looking to position itself as a global competitor in exports for both civil and military drones (Source: 1Lattice Report).
Drone regulations vary from country to country, with no universally applicable international drone legislation yet (Source: 1Lattice Report). The major countries in drone operations are Australia, China and U.K (Source: 1Lattice Report). These countries possess advanced regulatory frameworks which have evolved over time (Source: 1Lattice Report). The regulatory bodies in India have taken a step towards a more liberalized approach after considering the potential of drones in boosting the economy (Source: 1Lattice Report). With the notification of Drone Rules 2021, the government has taken several measures such as reducing extensive paperwork involved, increasing the number of “free to fly” green zones, and simplifying granting of permission for every drone flight, among others (Source: 1Lattice Report). India has introduced laws and policies addressing both the demand side (through drone policy) and the supply side (through PLI and import bans) to provide impetus to the indigenous
production of drones (Source: 1Lattice Report).
The Directorate General of Foreign Trade (“DGFT”) under the Ministry of Commerce and Industry, by way of notification in February 2022, modified the Indian Trade Classification (Harmonised System) 2022 Schedule-1 (Import Policy) and banned the import of drones in completely-built-up (“CBU”), semi-knocked-down (“SKD”) or completely-knocked-down (“CKD”) form, with the following exceptions: (a) import of drones by government entities, educational institutions recognized by central or state government, government recognized R&D entities and drone manufacturers for R&D purpose are allowed in CBU, SKD or CKD form, subject to import authorisation issued by DGFT in consultation with concerned line ministries, and (b) import of drones for defence and security purposes are allowed in CBU, SKD or CKD form, subject to import authorisation issued by DGFT in consultation with concerned line industries (Source: 1Lattice Report). However, the import of drone components is not banned and does not require any approval (Source: 1Lattice Report).
Company's Strength
Pioneer and the pre-eminent market leader in the Indian UAS industry, with first-mover advantage
The company is the pioneer and the pre-eminent market leader in the Indian UAS market, with a market share of approximately 50% in Fiscal 2022 (Source: 1Lattice Report). Company's Promoters built their first quadrotor drone in 2004. Company has started their operations in 2007 and with a first-mover advantage, we are among the first few companies in India to enter the UAV market and the first organisation to indigenously develop and manufacture VTOL UAVs in India in 2009 (Source: 1Lattice Report). In Fiscal 2012, we developed the NETRA UAVs in partnership with a Government of India entity. We are also the first company to participate in the demonstration of 5G enabled UAVs at Indian Mobile Congress in 2018 (Source: 1Lattice Report). We had the largest operational deployment of indigenous UAVs across India, with an ideaForge manufactured drone taking off every five minutes on average for surveillance and mapping for the nine months ended December 31, 2022 (Source: 1Lattice Report). Company's customers have completed over 300,000 flights using our UAVs as of December 31, 2022 (Source: 1Lattice Report). The company ranked 7th globally in the dual-use category (civil and defence) drone manufacturers, as per the report published by Drone Industry Insights in December 2022 (Source: 1Lattice Report).
Diversified product portfolio with a robust technology stack and track record of successful outcomes in critical use cases
The company have a diversified product portfolio of UAVs built for multiple use cases and have one of the industry’s leading product portfolios targeted at civil and defence applications (dual use) (Source: 1Lattice Report). We have 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 meters), communication range (approximately 2-15 km), payload types, etc. Each of our UAVs are designed with differentiations for addressing specific customer needs. Our UAVs are deployed in multiple use cases across defence and civil sectors. Further, our UAVs can be modified to address construction, infrastructure, retail, agriculture and delivery applications. We believe that our diversified product portfolio, and our ability to customise our products for specific usage as per our customers’ specifications have helped us grow and establish a track record.
Strong relationships with a diverse customer base
The growth company have achieved with their current products stems from their ability to invent and deliver advanced customer centric solutions (i.e., hardware, software and solutions), to help them operate more effectively and efficiently. As of December 31, 2022, served a diverse base of 265 customers. The company cater to domestic and international customers across defence and civil sectors, primarily for surveillance, mapping and surveying. While they do not enter into long-term contracts with their customers, the company have developed long-standing relationships with them. Company's continuous focus on product quality and reliability over the years has led to customer stickiness. For example, sold their first UAV to one of the state police departments in 2010 and since then company have received repeat orders from them. About 35% of their total customers are repeat customers who have placed at least two orders with their Company. Certain of their customers have steadily increased the volume of business they undertake with them over time.
Set forth below is a snapshot of our length of relationship with our customers and their revenue contribution.
In-house design to delivery capabilities
Management and Other Board of Directors
Srikanth Velamakanni is the Chairman and Independent Director of our Company and has been an Independent Director on the Board of our Company since December 14, 2022. He holds degree in bachelor of technology in electrical engineering from Indian Institute of Technology, Delhi and a post-graduate diploma in management from Indian Institute of Management, Ahmedabad. He is associated with Fractal Analytics Private Limited as the co-founder, group chief executive and executive vice chairman.
Ankit Mehta is the Chief Executive Officer and Whole-Time Director of our Company. He is a Promoter of our Company. He has been associated with our Company since its incorporation and has experience in the drone industry. In our Company, he is responsible for driving business growth, strategy, global expansion and investor relations. He holds a degree in bachelor of technology in mechanical engineering under the dual degree programme and a degree in master of technology in mechanical engineering with specialization in computer aided design and automation under the dual degree programme from Indian Institute of Technology, Bombay. He received the Young Alumnus Achiever Award from Indian Institute of Technology, Bombay in the year 2020.
Rahul Singh is the Vice President-Engineering and Whole-Time Director of our Company. He is a Promoter of our Company. In our Company, he is responsible for driving innovation and for product and technology roadmap. He has been associated with our Company since its incorporation and has experience in the drone industry. He holds a degree in bachelor of technology in mechanical engineering from Indian Institute of Technology, Bombay. He received the Young Alumnus Achiever Award from Indian Institute of Technology, Bombay in the year 2020.
Ashish Bhat is the Vice President-Research & Development and Whole-Time Director of our Company. He is a Promoter of our Company. In our Company, he is responsible for driving innovation and for product and technology roadmap. He has been associated with our Company since its incorporation and has experience in the drone industry. He holds a degree in bachelor of technology in electrical engineering from Indian Institute of Technology, Bombay. He received the Young Alumnus Achiever Award from Indian Institute of Technology, Bombay in the year 2020.
Ganapathy Subramaniam is a Non-Executive Nominee Director of our Company and has been associated with our Company since November 28, 2017. He holds a degree in bachelor of engineering in electrical and electronics engineering from Bharathidasan University. He was previously associated with Texas Instruments (India) Private Limited.
Mathew Cyriac is a Non-Executive Nominee Director of our Company and has been associated with our Company since June 24, 2022. He holds a degree in bachelor of engineering in mechanical engineering from Anna University, Madras, and a post-graduate diploma in management from Indian Institute of Management, Bangalore. He was previously associated with Blackstone Advisors India Private Limited, DLJ Merchant Banking Partners, Bank of America and Credit Suisse First Boston Corporation.
Shareholding Pattern
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Financial Performance
Consolidated Balance Sheet
Consolidated Profit and Loss
Consolidated Cash Flow
Risk Factors
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I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.
Source - Company's RHP, Axis Capital report for some data. Disclaimer - Given ipo analysis is only for the knowledge purpose, do not consider as an recommendation.
I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.
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