Ideaforge closes with 93% gain on Day 1: All you need to know

The company drew a rousing response from Dalal Street, mainly due to its leadership of the country’s unmanned aircraft systems (UAS) market and also as it has no listed competitors as yet.

Here’s all you need to know about Ideaforge and its initial public offering (IPO).

All about the IPO

Ideaforge delighted the markets on June 27 when its IPO was oversubscribed within hours of opening.

The issue was subscribed 106 times at close. The quota reserved for retail individual investors (RIIs) was subscribed 85.1 times, that for qualified institutional buyers by 125.81 times and non-institutional investors (NIIS) by 80.5 times.

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Ahead of the listing, the company’s shares commanded a grey market premium (GMP) of Rs 515 in the unlisted market.How will Ideaforge use the money?

The drone maker, backed by the likes of Infosys, Qualcomm, Celesta, EXIM Bank and Indusage Technology Venture Fund, among others, aims to use Rs 50 crore from its fresh issuance for repayment of certain debts availed by the company, Rs 135 crore to meet working capital requirements, and Rs 40 crore for investment in product development and for general corporate purposes.

Ideaforge’s flight in the drone sector

Founded by IIT Mumbai alumni Ankit Mehta, Rahul Singh and Ashish Bhat in 2007, Ideaforge has grown to become one of the biggest drone manufacturers in the country. The company launched its first fully autonomous micro unmanned aerial vehicle (UAV) within two years of its inception. It has since worked with the government on multiple projects, having delivered 70 drones to state agencies by 2014.

IT giant Infosys came in as an investor in Ideaforge in 2016, leading a $1.5 million funding round, and pumping in another $1 million in 2021.

ETtech

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.

Chief executive Ankit Mehta spoke to ET last month about funding and other hurdles in the sector. “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 said.

In FY23, the company reported an operating revenue of Rs 186 crore.

Funding woes for drone makers

A senior executive engaged in the space had told ET that funding for the sector has not always been easy, as the industry’s reliance on a few major customers or sectors has kept growth-stage VC and PE funds at bay.

Slow payment processing by government entities has also put off major investors looking for high growth rates, he added.

Policy push to India’s drone sector

The bumper listing of Ideaforge indicates good tidings for the industry as a whole. To tap the potential of the sector, the government liberalised rules that regulate the space in 2021 to “usher in an era of supernormal growth” while balancing safety and security considerations.

The Drone Rules, 2021 reduced the number of forms and permissions required to be submitted by drone manufacturers and operators while removing the requirement for security clearances for registration and license issuance.

The government’s production-linked incentives scheme for indigenous drone manufacturers and service providers also set the ball rolling to make the sector inviting.