ideaForge Promoters Team with the Netra V4 drone L- R: Mr Rahul Singh, VP-Engineering, Mr. Ankit Mehta, CEO & Mr. Vipul Joshi, CFO, ideaForge Technology Limited during the IPO announcement conference held today at Hotel Taj Mahal Palace, Colaba, Mumbai – Photo By GPN
The IPO comprises a fresh issue of equity shares worth Rs 240 crore and an offer for sale (OFS) of 48,69,712 equity shares. The offer also includes a reservation for a subscription by eligible employees.
MUMBAI, 21 JUNE, 2023 (GPN): India’s Largest Drone manufacturer Ideaforge Technology Ltd on Wednesday fixed the price band for its initial public offering at Rs 638 to Rs 672 per share, aiming to raise between Rs 550.69 crore and Rs 567.24 crore.
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.
Proceeds from the fresh issuance to the tune of Rs 50 crore will be utilised for debt payment, Rs 135 towards funding working capital gap, Rs 40 crore for investment in product development and the remaining amount for general corporate purposes.
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.
Speaking to GPN, Ideaforge CEO, Ankit Mehta said, “Drone technology is a sunrise industry, with India having huge potential to become the drone hub of the world. The global industry has grown at 19% CAGR from 2018 to 2022. We have filed 62 patents, including 28 patents filed in India and 38 patents filed internationally. The company is backed by eminent investors such as Infosys Ltd, Qualcomm, and Asia Pacific Pte. Ltd.”
He added, “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.”
He further added, 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.
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.
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 the diversification, so it makes more sense for other industries to mature and catch up. Slow payment processing by government entities has also put off major investors looking for high growth rates.”
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.
Last week, the company raised Rs 60 crore in a pre-IPO placement round from institutional investors, including Tata AIG General Insurance, 360 ONE Special Opportunities Fund- Series 9 and 10, Motilal Oswal Midcap Fund, and Think Investments PCC.
As per the company, investors can bid for a minimum of 22 equity shares in the public issue and in multiples of 22 equity shares thereafter.
JM Financial and IIFL Securities are the book running lead managers to the issue.
About Ideaforge Technology Ltd: Founded in 2007, the Mumbai-based company has the largest operational deployment of indigenous Unmanned Aerial Vehicles (UAVs) across India, with its drones taking off every five minutes on average for surveillance and mapping.
ideaForge has been backed by several marquee ventures and private equity investors, including Qualcomm Asia, Infosys and Celesta Capital.
Mathew Cyriac-backed Florintree Enterprises is the single largest shareholder in the company with an 11.85 per cent stake.
The drone maker’s customers include the armed forces, central armed police forces, state police departments, disaster management forces, forest departments and civil customers.
Ideaforge engages in investing, designing, and delivering customer-centric UAV products through a vertically integrated model. Being one of the first few players in the domain, they have introduced innovations in technology and design. The company showcased their 5G-enabled UAVs at the Indian Mobile Congress in 2018. They are among the few OEMs having proprietary autopilot sub-system and ground control software.
Financially, the company’s revenue from operations had grown at 237.48% CAGR in the last three fiscals.The company recorded 49.63% returns on capital employed in Fiscal 2022. Their revenue from operations increased from Rs. 139.99 million in 2020 to Rs. 1,594.39 million in Fiscal 2022, recording 11.39x growth.
During the 2015 earthquake, ideaForge UAVs were used for site monitoring in Kathmandu, Nepal, and other locations to aid the search and rescue activities.
During a terrorist incident in Pampore in 2016, ideaForge UAVs were able to deliver crucial intelligence by revealing the precise locations of the terrorists, as per the draft papers.Ends
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