Idea Forge, India’s undisputed leader in the drone market with a 50% market share, is launching its IPO on 26 June. In this article, we will discuss Idea Forge’s business model leadership, future growth prospects, key risks, and IPO details along with valuation. This article is for educational purposes only, and we recommend conducting your own research before investing.
The development of drones in the Indian market remains a topic of great interest. As the military and civilian applications of unmanned aerial vehicles continue to evolve, businesses are embracing these technologies in record numbers. This article will offer a deeper understanding of the future growth prospects for IdeaForge, a drone manufacturing company, in both the defense and civil segments.
Drones have been in existence for a while now, but their adoption for commercial use has been quite recent. A growing number of logistics and transportation companies around the world are now using drones for delivering food and other products. In India, the drone market is still in its nascent stage, but its future seems to be bright. According to reports, the Indian drone market is expected to grow exponentially in the coming years, and IdeaForge is currently the leading player in this market.
IPOs or Initial Public Offerings allow a private company to raise capital by offering its shares to the public for the first time. This opportunity is not only beneficial to the company but also to investors who believe in the company’s growth potential. One such company that is soon coming up with its IPO is Forge. In this article, we will delve into the IPO details of Forge and analyze whether it’s worth investing in.
Idea Forge, a drone technology company, is set to launch its initial public offering (IPO) in the coming days. The IPO is expected to receive a great response from the market, however, the only point of concern is the higher valuation. Let’s explore the potential of this company and its prospects in the market.
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The Journey of Idea Forge
The journey of Idea Forge began in 2004 when two IIT Bombay students, Ankit Mata and Rahul Singh, came up with the idea of a quadcopter for their college project. They built their first prototype in 2004 and continued to work on the technology by delivering autopilot technology for DRDO, which is the brain of the drone. Eventually, they established Idea Forge in 2007. From a fun college project, Idea Forge has become India’s largest known drone manufacturing company with 50% market share.
Business Model Leadership
Idea Forge’s biggest strength is its vertically integrated solution. The company has full control over hardware and software solutions, and everything is designed, developed, and manufactured in-house. This not only gives Idea Forge complete control over production but also enables them to customize solutions efficiently and effectively for their clients. This ability to provide customized solutions, along with in-house manufacturing, gives Idea Forge a competitive edge over its rivals.
Future Growth Prospects
According to a report by BIS Research, the Indian drone market is expected to grow at a CAGR of 18.2% from 2019 to 2027. The report also highlights the increasing demand for drones in various sectors, including agriculture, infrastructure, and healthcare. Idea Forge is well-positioned to capitalize on this growing demand, thanks to its dominant position in the Indian drone market.
In addition, Idea Forge’s expertise in both the civil and defense drone manufacturing sectors could help the company grow its market share globally. Currently, Idea Forge is ranked seventh in the world in the dual usage category of civil and defense drone manufacturing as of December 2022.
While the growth prospects for India’s drone market look promising, there are risks associated with investing in Idea Forge. One risk is the company’s dependency on government contracts for revenue, which could lead to volatility in earnings. In addition, Idea Forge operates in a highly regulated industry and must ensure that its products comply with various regulations, including privacy and safety laws. Failure to comply could result in reputational damage and legal liabilities.
IPO Details and Valuation
Idea Forge’s IPO is set to launch on 26 June, with the company looking to raise INR 1,100 crore ($150 million) at a valuation of INR 3,600 crore ($500 million). The IPO will consist of a fresh issue of INR 75 crores and an offer for sale of up to 1.8 million shares by existing shareholders.
Based on its dominant market position, vertically integrated solution, and future growth prospects, Idea Forge’s IPO could prove to be an attractive investment opportunity for prospective investors. However, it is crucial to conduct independent due diligence before making any investment decisions.
Forge’s Proprietary Autopilot System
Forge, a regional equipment manufacturer, has raised the bar when it comes to drone technology. One of the few companies globally to have its own proprietary autopilot subsystem and Ground Control software, Forge’s innovative engineering is revolutionizing the way UAVs are being used today. The autopilot software makes it possible to remotely control the drone and provide autonomous flight completion with intelligent failsafe features such as return to home.
The Power of Patents
With its continuous focus on product development and innovation, Forge has filed 41 patent applications so far, including 20 international patent applications and 21 applications in India. This puts Forge at the forefront of drone technology and innovation.
Drones for All Purposes
With a wide range of UAVs in its product portfolio, Forge’s drones are suitable for various applications. From the Switch UAV, which offers up to 15 kilometers of operational range, to the Ninja UAV, the lightest in its category, with a two-kilometer operational range and up to 2 kg takeoff weight. The Rhino UAV and the Q6 UAV are also excellent choices for surveillance and security operations.
Mapping and Surveillance Applications
When it comes to categorizing the applications of Forge’s drones, there are two broad categories: mapping and security and surveillance. Mapping applications include land surveys, boundary demarcation, field management planning, designing, and establishing accurate land records. The UAVs’ highly advanced optical zoom capabilities can capture aerial data with pinpoint accuracy for these mapping applications.
Secure Your Surroundings with Forge’s Drones
The second category of applications is security and surveillance. Forge’s drones can be used for high altitude, high endurance, long-range surveillance and security operation or as a last-mile solution to protect critical infrastructure. Additionally, these drones can also assist in search and rescue operations and natural disaster relief efforts.
Forge’s innovative engineering and drone technology have transformed the way in which drones are being used today. Its patented autopilot subsystem and proprietary Ground Control software provide for autonomous flight completion with intelligent failsafe features. Their drones’ capabilities make them suitable for surveillance, security, and mapping applications, providing accurate data with pinpoint accuracy. With their wide range of UAVs, Forge remains at the forefront of drone technology and innovation.
Drones have found their way into the mining sector where the primary concern is ensuring the safety of the mining workers. Mining companies can use drones to access areas where employees cannot enter safely. Aerial images captured from drones can help map the land and identify potential hazards, making mining a safer and more efficient process.
Construction and Real Estate
In construction and real estate projects, land mapping and surveying are crucial to planning for operational efficiency. Drones are used to take high-resolution images that help in analyzing and creating virtual 3D maps of the site. The data captured through drones helps to minimize human error, thereby enabling more accurate designs and improved project planning.
Security and Surveillance
One significant usage of drones in security and surveillance is to identify potential threats and track terrorists. Anti-terrorist activities have been one of the most significant applications of drones. The 360-degree coverage provided by drones can significantly help armies during a conflict. In border security, drones are used to patrol the border and gather data in harsh climatic conditions. In Crime Control, drones can help chase suspects and control crimes, making our world a safer place to live.
Idea 4G AV: An All-Weather Drone
Idea 4G AV, designed by IdeaForce, has been used in extreme weather conditions, ranging from low temperatures at high altitudes, such as in Ladakh, to very high temperatures, such as in Thar desert. Drones like Idea 4G AV have immense applications in both civil and defense sectors. The use of drones enables better coordination between teams and significantly reduces risks to human life.
IdeaForce’s Customers and Manufacturing Facility
IdeaForce has served 265 customers so far, including the central armed police force, State Police Department, disaster management forces, Forest Department, private contractors of smart cities, CE info system payment company of mapindia, and many more. The company’s manufacturing facility spans across 21,000 square feet in Navi Mumbai.
Leadership at IdeaForce
Ankit Mehta, an alumnus of IIT Bombay, is the co-founder and CEO of IdeaForce. With a dual degree in B. Tech and M. Tech, he leads a skilled team of engineers and designers that drive the innovation behind IdeaForce’s products.
Drones have revolutionized the way we perform tasks across different sectors. Their versatility and all-weather capabilities make them ideal for use in civil and defense-related projects. Companies like IdeaForce continue to design and develop innovative products such as Idea 4G AV, that has a broad range of applications in various fields, making them the preferred choice for companies looking to enhance safety and efficiency.
IdeaForge was co-founded by three young men who all graduated from IIT Bombay: Ankit Mehta, Ashish Bhat, and Rahul Singh. Rahul Singh is the company’s VP of Engineering and holds a degree in mechanical engineering from IIT Bombay, as well as a bachelor’s degree in electrical engineering from ID Bombay. With such a strong technical background, the co-founders undoubtedly possess the pedigree that is required to succeed in the aviation industry.
When it comes to drones, India’s defense sector is the primary market. India is surrounded by enemies and drones play a critical role in keeping a close surveillance. UAVs, costing tens of thousands of dollars, precisely attack and destroy heavy artillery worth millions. Within the defense segment, drones are used in three critical areas: intelligence, surveillance, and target acquisition and reconnaissance; combat; and logistical support. Last year, the Indian government banned the import of foreign drones to encourage domestic manufacturing, but there are exceptions. For instance, drone imports by Indian government entities or other recognized R&D entities are allowed.
The civil segment has also shown promising growth prospects. There is a rising demand for drones in industries such as agriculture, infrastructure, and energy. For example, drones can help in surveying industrial sites, wind turbines, solar panels, and power transmission lines. Additionally, they can assist in mining, mapping, and even search and rescue operations.
The Future of Indian Drones
The rapid growth of drones in India has increased the need for regulation and standardization. In December 2018, India released draft guidelines for drone usage, stating that every drone must be registered, and a unique identification number assigned for tracking purposes. The guidelines will ensure safety and security while balancing the need for innovation and growth.
The Rise of Indian Drone Industry: Opportunities and Applications
Drones, also known as unmanned aerial vehicles, have become increasingly popular and widely used in recent years. They are used in numerous industries, from agriculture to entertainment, and have even been used in rescue missions and military operations. India is no exception in this global trend and its drone industry has experienced rapid growth in recent years. India’s government has taken various initiatives to push the growth of the drone sector, making it a promising industry for investors and entrepreneurs.
The Push from Indian Government
The Indian government has taken various initiatives to promote the growth of the drone industry. While the import of drone components is not banned, the government is pushing for indigenous manufacturing of drones in the country. The government announced the Production Linked Incentive (PLI) scheme as part of its Atmanirbhar Bharat Abhiyan or self-reliant India campaign. The drone sector is one of the sectors under the PLI scheme, and it is expected to create jobs and boost economic growth. This scheme is designed to encourage and incentivize domestic manufacturing and provide direction to the development of the drone industry in India.
Applications of Drones
The civil sector is one of the major sectors where drones find huge application. They can be used for monitoring the state of infrastructure, such as power, communication, ports, airports, railway bridges, and more. Construction companies can use drones to monitor their projects and develop city plans. Drones can also provide useful analytical data for crowd and traffic management.
In the agriculture sector, drones enable farmers to gather information that can help with crop management, health management, crop treatment, soil analysis, crop damage assessment, and more. The data collected by drones can be used to create more accurate maps of farms and assess the health of crops.
Drones are also used in the media and entertainment industries. Film directors use drones to capture aerial shots for specific scenarios that previously required helicopters, thus reducing operating cost. Aerial photography that captures images from high elevation has grown in popularity. Moreover, drones are also used in GIS, which stands for geographic information system. Drones are used for mapping and surveying, and help identify the clear ownership of property.
Another potential application of drones is in the logistics sector. With the increase in demand for faster and more efficient delivery at a low cost, especially in the e-commerce sector, drones are being seen as a viable option for last-mile deliveries. Customers are willing to pay extra to get packages delivered on the same day, and drones can make this possible.
IdeaForge – A Pioneer in Indian Drone Market
Founded in 2007, IdeaForge is an Indian technology-driven company that specializes in developing drones for commercial use. They have been at the forefront of drone technology innovation in India for more than a decade now. IdeaForge has a complete indigenous capability of in-house design, development, and manufacturing with 41 patent applications filed. Out of which, 10 patents have been granted in India, and 15 patents have been granted outside India.
The First-Mover Advantage
IdeaForge holds a significant market share of 50% of the Indian drone market. They have the first-mover advantage and a strong relationship with key clients. The company is known for its vertical integration as they manufacture everything in-house, including UAVs, payload batteries, chargers, communication systems, software, and embedded subsystems, including autopilot software.
Creating a Strong Moat
IdeaForge’s focus on hardware, software, and subsystems enables remote control and autonomous completion of flight, creating a strong moat for the company. They are also developing UAVs with longer flight times and larger payload carrying capacity, offering a comprehensive solution for clients. Moreover, IdeaForge intends to focus on developing a platform with a payload carrying capacity of more than 100 kg and capable of traveling more than 100 km.
The Future of Drone Technology in India
As the Indian drone market continues to grow, there will be more opportunities for companies like IdeaForge to expand their offerings. With their focus on innovation and technology, IdeaForge is well-positioned to maintain their market leadership in the Indian drone market. The growth of the drone market is likely to be fueled by the government’s push towards “Made in India” products and the need for more efficient and cost-effective logistics solutions.
Idea Forge: A Rising Star in the Indian Drone Industry
In recent years, the Indian drone industry has witnessed tremendous growth, fueled by increasing government regulations, advancements in technology, and rising demand for drone services in various sectors. Among the companies that have emerged as market leaders is Idea Forge, founded in 2007 by IIT-Bombay graduates Ankit Mehta, Rahul Singh, and Ashish Bhat. The company has established itself as a pioneer in the drone industry, offering cutting-edge drone technologies and services that cater to diverse industries.
Game-Changing Drone Technologies
One of Idea Forge’s most significant innovations is the Netra Drone, a state-of-the-art UAV designed for surveillance and inspection applications. The Netra Drone is equipped with high-resolution cameras, thermal sensors, and AI-powered image processing capabilities that enable it to capture and analyze data in real-time. This drone has been widely used in the defense sector, disaster management, and other industries that require high-precision aerial surveillance.
The company has also developed the Aerospaxx Drone, a versatile UAV that can be used for various applications, such as aerial surveys, mapping, and inspection of infrastructure. The Aerospaxx drone is equipped with advanced sensors and cameras that can capture high-resolution images and data, providing valuable insights to clients.
Drone as a Service
Apart from providing cutting-edge drone technologies, Idea Forge has also launched a unique service called “Drone as a Service.” This service offers ready-to-fly drones that can be scheduled or requested on-demand without the hassle of owning hardware, software, or manpower. This service has gained popularity among clients in various industries, as it provides a cost-effective solution for drone services.
Market Expansion Plans and Risks
Currently, Idea Forge caters primarily to the Indian market. However, the company has ambitious plans to expand its services globally. The company is already present in Oman and the USA and is evaluating expansion in Bangladesh, Vietnam, and Nepal. Furthermore, the company aims to strengthen its position in the United States, which is the biggest market for drones in the world.
However, while Idea Forge has shown impressive growth in recent years, there are also risks associated with its business. Firstly, the company’s revenues and profits are heavily reliant on its order book, which has been volatile in the past. While the company has seen exponential revenue growth in the past three years, this may not be sustainable in the long run. Secondly, the company has negative cash flow from operations, which may impact its financial stability in the future.
Focusing on Risks to be considered by Investors in Ideaforce
Investing is a crucial decision that should be made after proper analysis of risks involved. Ideaforce, a leading drone manufacturer in India, has been the talk of the investment market for a while now. However, before investors move to put their money into the company, they must consider some of the risks involved.
Negative Cash Flow from Operations
Ideaforce has had negative cash flows from operations due to its investment in product development. While this is generally a positive thing, investors need to be aware that it is taking a long time to pay off. The company’s long working capital days of 512 and 205 inventory days are affecting the cash flow. Although it reduced to 121 days in FI 21, it went up to 301 days in F 23, which needs investment in working capital.
Dependency on Government Entities
The key reason Ideaforce has struggled with cash flow is that currently, more than 95% of its revenue is from government entities. The payment from the government takes time, which can be a risk for investors to consider. They must keep this in mind before deciding to invest in Ideaforce.
Dependency on Global Vendors for Component Import
Another risk is Ideaforce’s dependence on global vendors for component import. Although the company manufactures its products in-house, it still has a dependency on foreign players like China for importing certain components. If critical components become unavailable, it can create manufacturing and delivery problems and eventually impact the company’s revenue and profit.
Dependence on Single Manufacturing Facility
Ideaforce currently only has one manufacturing facility in Navi Mumbai. Any shutdown or slowdown of this facility can impact the companys operations, and investors need to be aware of this risk.
The drone sector is highly regulated, and Ideaforce must maintain compliance with regulations. Any non-compliance to regulation can lead to penalties, and there have been cases in the past where the company faced such issues. Investors need to be aware of this compliance risk.
Technology Obsolescence and Rising Competition
Apart from the above-discussed risks, technology obsolescence and rising competition are also factors that investors should consider. The drone sector is evolving continuously, and it is important for any drone manufacturer to keep up with the rapidly advancing technology. The rising competition in this industry is another factor that can impact Ideaforces growth in the long run.
Cyber Attack and Viruses
Finally, yet importantly, the company is also exposed to the risk of cyberattacks and viruses, which can create operational problems for any organization. Investors should ensure that Ideaforce has implemented adequate measures to avoid any such risks.
Details of the IPO
Forge’s IPO date is between 26 June to 29 June, and the issue sizes 567 crore out of which there’s a fresh issue of 240 crore and the remaining 327 crore is an offer for sale from the net proceed of fresh issue of equity. The company intends to utilize 50 crore for repayment of borrowing, 135 crore for working capital, and 40 crore for product development.
Share Price and Market Capitalization
The company share price ban is between 638 rupee to 672, and one lot includes 22 shares. At the higher price band, the company would command a market cap of 2800 crore and a PE ratio of 87. This is a very high valuation, and the management knows that there is a huge grace for defense stock, and hence they are leveraging the situation.
Considering the immense growth potential in the sector and the Company’s leadership, it will certainly command a premium. The only question is, is it worth paying such high premium? Although the IPO would receive a great response because of its exponential growth potential, it’s unsure if it’s worth investing in.
It looks like worth applying for both short-term and long-term wealth creation, but the biggest catch is that when an IPO has a high gray market premium and high interest, the allocation chances are very low.
If we look at the peers in the sector, we can see that high valuation is a common occurrence. For instance, MTR has a commanding P/E of 56, data pattern commands are P of ad1, and extra microwave commands have a P/E of 50. This suggests that all peers in the sector have high valuation, although this may not be an apple to apple comparison.
Idea Forge has raised funding from some big names like Infosys, Qualcomm, and Asia Pacific. Moreover, idafos has recently raised 254 crore via an anchor book ahead of IPO, receiving interest from marquee investors, including Pine Bridge Global fund, Numura, Ashoka India, HSBC Mutual fund, and Goldman Sachs India. This highlights the company’s undisputed leadership in drone technology with a 50% market share in India.
Strong Business Model
Idea Forge has been a pioneer in the drone technology space with a very strong leadership team and years of relationships with clients. Furthermore, the company is vertically integrated, manufacturing both hardware and software, creating a very strong moat around its business.
Despite the promising outlook, there are certain risks involved in investing in Idea Forge, such as negative cash flow from operations, volatile order book, increasing competition, and compliance issues.
Define your Financial Goals
To manage your finances effectively, you need to define your financial goals. What do you want to achieve in the short and long term? Do you want to save for a down payment on a house, pay off your debts, or invest in stocks? Identifying your financial goals will give you a sense of purpose and direction, which are crucial for effective money management.
Create a Budget
Creating a budget is one of the most effective money management strategies. A budget will help you track your income and expenses, identify areas where you can cut back on spending, and allocate your money towards your financial goals. Start by listing all your income sources and expenses, including fixed expenses such as rent and utilities as well as variable expenses such as dining out and shopping.
Track Your Expenses
Tracking your expenses is essential to effective money management. It will help you identify areas where you are overspending and where you can cut back. You can track your expenses manually by writing down every penny you spend or by using online tools such as budgeting apps that automatically track your expenses.
Save for Emergencies
No matter how well you plan your finances, unexpected expenses can always arise. To avoid financial stress, it’s important to have an emergency fund. Ideally, your emergency fund should cover at least six months of your living expenses. Start by setting aside a small percentage of your income each month and gradually building your emergency fund over time.
Invest for your Future
Investing your money is one of the most effective ways to grow your wealth over time. Whether you choose to invest in stocks, real estate, or mutual funds, it’s important to educate yourself on the various investment options available. Explore investment courses and online resources to learn about investment strategies and risk management.
The future growth prospects for IdeaForge in the drone market are bright. With an already established presence in the defense sector, India has proved to be a prime location for the company to expand its portfolio. Drones can help India’s military to effectively monitor its borders while providing security and surveillance to important infrastructure and assets. It is not hard to envision a future where drones are a ubiquitous presence in the Indian skies, and IdeaForge is at the forefront of this technological revolution.
The rise of the Indian drone industry brings plenty of opportunities for entrepreneurs and investors. The Indian government’s push towards indigenous manufacturing of drones and the PLI scheme are some important factors that will help this industry grow. Drones have a wide range of applications – from monitoring infrastructure to agriculture and media & entertainment. The logistics sector, especially e-commerce, holds great potential for the future growth of drones in India. Drones are poised to transform the way we work and live, and the possibilities are endless.
IdeaForge’s vertical integration, in-house design, development, and manufacturing capabilities, and innovative solutions have made them the leading player in India’s drone market. With the projected growth in the market, IdeaForge’s focus on developing their products and expanding their portfolio positions them to capitalize on the growing demand for drone technology in India.
Despite the risks involved, Idea Forge remains a rising star in the Indian drone industry. Its innovative technologies and services have gained popularity among clients in diverse industries, while its market expansion plans are ambitious and promising. With continued investment in research and development and strategic expansion plans, Idea Forge is set to become a global leader in the drone industry.
Investing in Ideaforce can be a lucrative decision, but it is essential to consider the various risks involved and do proper financial analysis before investing. A thorough assessment of the company’s financial details, including past performance, and an understanding of the drone sector’s growth rate are critical factors that investors should consider before investing in Ideaforce.
In case you don’t receive the IPO allotment and share price jumps 40-50% on listing day itself, keep an eye on the particular stock and wait for the right time to invest. IPOs can be a good opportunity, but one needs to analyze them correctly before investing. As for Forge’s IPO, it’s high valuations may deter some investors, but its exponential growth potential is definitely worth considering.
Idea Forge is a promising IPO with high valuation. For long-term investors, this company is definitely worth keeping an eye on, in case the allotment is not possible in the current scenario. The company’s strong business model and leadership team make it a potential leader in the drone technology space, with applications across defense and civil sectors.
Improving your money management skills takes time and effort, but the rewards are worth it. By defining your financial goals, creating a budget, tracking your expenses, saving for emergencies, and investing for your future, you can achieve financial stability and security. Remember, effective money management is not about depriving yourself but rather making smart choices that will benefit your financial future. So start implementing these strategies today and take control of your finances.