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Update | June 23, 3:19 PM

Shares of drone manufacturer ideaForge surged as much as 10% to hit the upper circuit at INR 631.65 during the early trading hours on the BSE today, after the company bagged an order from the defence ministry.

As per an exchange filing, the company secured an order worth around INR 137 Cr (all inclusive) to supply mini UAVs with accessories to the defence ministry.

The terms and condition of the order outlines that mini UAVs with accessories to be delivered within 12 months.

Original | June 23, 11:58 AM

Shares of drone manufacturer ideaForge jumped as much as 10% to INR 631.65 during the early trading hours on the BSE today, driven by a rally in defence stocks.

Defence stocks in India surged today primarily due to heightened geopolitical tensions, particularly the recent escalation between Israel and Iran. Over the weekend, the US launched missile strikes on Iran, targeting nuclear facilities and further escalating the conflict in the Middle East.

Even at 11:12 AM, ideaForge shares were hovering around the same range, trading 9.3% higher at INR 628.10 on the BSE.

At this point, its market capitalisation stood at INR 2,711.81 Cr, with a trading volume of 35.72 Lakh shares.

Despite weakness in the broader market (with both Nifty 50 and Sensex down 0.7% and 0.8 at 11:12 AM), the Nifty India Defence Index was up 1.35% at 9,008 points.

The Nifty Defence Index has significantly outperformed the Nifty 50 this year, delivering a return of around 35% in the last six months, compared to the Nifty 50’s 5% return during the same period.

Defence stocks like Mazagon Dock, HAL, Bharat Dynamics, and others traded higher, as investors viewed them as beneficiaries of both immediate geopolitical developments and long-term strategic trends.

A combination of rising geopolitical tensions (particularly the Israel-Iran conflict), expectations of increased defence spending and a robust government policy push for indigenisation is believed to have bolstered defence stocks in recent times.

Recently, Defence Secretary Rajesh Kumar Singh said that contracts worth around INR 2 Tn are expected to be signed in FY26, compared to INR 2.09 Tn in FY25. The government also set ambitious targets for defence exports: INR 35,000 Cr by 2025 and INR 50,000 Cr by 2028–29.

To put things in perspective, the Ministry of Defence signed 193 contracts, the highest ever in a single year, worth INR 2,09,050 Cr in 2024–25. Of these, 177 contracts were awarded to the domestic industry, amounting to INR 1,68,922 Cr.

Investors have been actively bidding up shares of companies involved in airpower, missile systems, and defence technology, especially since India launched Operation Sindoor on May 7.

Since then, ideaForge shares have surged 59% (based on the previous closing price), but over a bit longer horizon, ideaForge has delivered a 1% return year to date and a 22.48% negative return over one year at the current market price.

ideaForge entered Indian bourses (BSE and NSE) on July 7, 2023. The IPO price band was set at INR 638 to INR 672 per share, and the stock listed at a premium at INR 1,295.50 per share on its debut day, nearly doubling the issue price. After the initial euphoria, the stock corrected to reach its 52-week low of INR 301.00 as investors reassessed valuations, sector growth rates, the company’s quarterly performance and broader market correction.

On the financial front, ideaForge reported its third consecutive quarterly loss in Q4 FY25, with a consolidatednet loss of INR 25.7 Cr, up 7% from INR 24 Cr in the previous quarter. In comparison, it had posted a net profit of INR 10.3 Cr in the year-ago period.

Despite a negative PE ratio of 52.99, the stock trades at 4 times its book value.

Founded in 2007 by a group of IIT Bombay alumni: Ankit Mehta, Rahul Singh, Ashish Bhat, and Vipul Joshi, ideaForge’s core revenue comes from manufacturing and direct sales of technologically advanced, high-performance unmanned aerial vehicles (UAVs) to clients in defence, law enforcement, infrastructure, agriculture, mining, and other sectors. Besides this, the company makes money from maintenance services, training services, and software services, among others.

ideaForge’s current order book is skewed towards civil contracts, comprising 96%, while defence accounts for just 4%.

Its operating revenue slumped 80% YoY to INR 20.3 Cr in Q4 FY25. The company attributed the steep drop to a slowdown in government orders, consistent with explanations for the previous two loss-making quarters.

In response to revenue pressures, the company is shifting from a pure-play drone manufacturer to a drone solutions provider. It has launched Flyght Cloud, a cloud data analytics platform, and FLYGHT Docks, a drone-as-a-service platform.

Further strengthening its portfolio, ideaForge recently unveiled new drone models, Netra 5 and Switch V2, at the AeroIndia show held in February.

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