Decoding Red Herring Prospectus of ideaForge


Drone manufacturing company, ideaForge has filed its Red Herring Prospectus (RHP) with market regulator Security and Exchange Board of India (SEBI). The Mumbai-based company is looking to raise around Rs 570 crore from the public market.

The fresh issue size will be Rs 240 crore while the company will offer its 48,69,712 equity shares, aggregating a sum of around Rs 327 crore through an offer for sale.

The company had filed its Draft Red Herring Prospectus (DRHP) with SEBI in February this year to raise Rs 300 crore via fresh issue. As per the board, the size of the fresh issue of up to Rs 300 crore has been reduced to the revised size of Rs 240 crore.

The RHP further revealed that the drone startup has raised a pre-IPO round of Rs 60 crore from Motilal Oswal Mutual Fund, Think Investments PCC, 360 One Asset Management and Tata AIG General Insurance. Following the round, the company has been valued at around Rs 2,560 crore. 

ideaForge has appointed JM Financial and IIFL Securities as the book-running lead managers (BRLMs) for the listing while Link Intime India Private Limited will be the registrar.

Out of the total fresh proceeds from the public, Rs 135 crore will be used towards filling the working capital gap. The company plans to utilize a further Rs 50 crore for repayment or prepayment of borrowing from HDFC Bank, Axis Bank and Export Import Bank of India and Rs 40 crore for product development and the rest for other corporate purposes.

The offer period of the IPO will be from 26th June to 29th June 2023 with a price band of Rs 638-672. As per the indicative post issue timeline, 7th July 2023 will be the listing date of the company.

Founded in 2007, ideaForge focused on providing advanced unmanned aerial vehicle (UAV) solutions. It designs, manufactures, and supplies UAVs along with associated hardware components such as payloads, batteries, chargers, and communication systems. They also offer software and embedded sub-systems that enable industry-specific applications.

Additionally, the company is developing UAVs as an on-demand service for various applications such as DFR, progress monitoring, and inspections. This will allow quick deployment of drones to assess situations and make informed decisions in real-time, even before first responders arrive.

Shareholding Pattern

As of the date of RHP, Celesta Capital is the largest stakeholder in the company with 12.78% stakes followed by Florintree Enterprise who owns 11.85% of the company. Promoters – Ankit Mehta, Rahul Singh and Ashish Bhat collectively command 27.89% of the cap table. The complete shareholding pattern of the company can be seen below:


Financial Performance

ideaForge’s revenue from operations surged 16.7% to Rs 186 crore in FY23 from Rs 159.4 crore in FY22. ideaForge primarily provides drones to Indian defence forces, hence it remains the largest source of revenue in FY23 forming nearly 70% of the total. In the civil segment, its drones are used by forest departments, state police departments, disaster management forces, among others.


Besides operating income, ideaForge also earned Rs 10.4 crore as non-operating revenue (income and gains on financial assets).

Following the 42.7% and 89.6% increase in its cost of materials and employee benefits to Rs 58.84 crore and Rs 50.9 crore respectively during the year, ideaForge’s total expenditure went up 39.8% to Rs 155.6 crore in FY23. ideaForge spent around 27.37% of its operating revenue on employee benefits.

The rapid rise in expenses negatively affected the company’s bottom line. ideaForge’s profits shrank 27.3% to Rs 32 crore in FY23 as compared to Rs 44 crore in FY22. Significantly, the firm recorded a loss of Rs 14.62 crore in FY21.

The contraction in profits can be attributed to over 4X jump in ESOP expenses (booked under employee benefits) of Rs 27.7 crore during FY23.

Coming to ratios, EBITDA margin and ROCE were registered at 29.27% and 13.48% during FY23. On a unit level, ideaForge spent Re 0.84 to earn a rupee of operating income.


During FY23, the company’s order book value contracted 38.2% to Rs 192.27 crore from Rs 310.87 crore in FY22. The order book value was Rs 136.4 crore in FY21.

ideaForge previously raised around $40 million including a $20 million worth Series B round led by Florintree Enterprise in April 2022.

While the high dependence on the government would usually be a negative, in this case, it isn’t, as the defence forces in India are still playing catch up when it comes to the usage of drones. Thus, the competition would be from other entrants and players in the market. 

The civil market in the meanwhile probably offers a lot of promise, especially agriculture, where innovative rental or financing models would play a key role as well. Key input costs on batteries are set to drop, giving the firm some leeway in pricing as well as seeking further market expansion.

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