Ashika Securities Sees 27% Upside in Ideaforge Amid India’s Drone Market Growth

India's drone manufacturing sector is transitioning from a specialized defense technology niche to a significant component of the country's military acquisition framework. This evolution is expected to open a multi-year growth window for domestic drone producers. Ashika Institutional Research recently highlighted this shift as a major investment opportunity, focusing on Ideaforge Technology, a leading Indian drone maker.

Following pivotal events such as Operation Sindoor in May 2025, the ongoing conflict between Russia and Ukraine, and unrest in West Asia, drone applications have gained strategic importance in defense circles worldwide. Ashika initiated coverage on Ideaforge with a BUY rating and set a price target of ₹942 per share, representing a potential 27% gain from the current market price of ₹741.

The brokerage’s bullish stance rests on several pillars: increasing defense purchase activity, protectionist policies favoring domestic firms, Ideaforge’s advanced technology, and a forecasted jump in profitability driven by revenue growth. Ashika described the investment case as an operating leverage opportunity, where fixed costs such as employee expenses will rise slower than revenue, nearly doubling annually. This dynamic is expected to lift the company’s EBITDA margin dramatically from just 2% to 29% within two years.

To arrive at its valuation, Ashika applied a price-to-earnings multiple of 32 for fiscal year 2028, based on an anticipated earnings per share of ₹29.4. The target price reflects a price-to-earnings-growth ratio below 1.0, placing Ideaforge within the peer group range of 30 to 65 times P/E, along with a scarcity premium as India’s only publicly traded pure-play drone manufacturer.

In market terms, Ideaforge’s share price has faced some short-term pressure, declining 7.5% over the past month and 11.5% in three months. However, the stock has delivered strong gains over longer periods, surging over 80% in six months and rising 38.5% over the last year. Currently trading near ₹730.90, the stock remains about 27% below its 52-week high of ₹997 reached in June 2026, and well above its 52-week low of ₹367.95 from March 2026.

Key Drivers Behind Ashika’s Optimism

A major catalyst identified by Ashika is India’s ₹200 billion Fast Track Procurement (FTP) pipeline, which spans armed unmanned aerial vehicles (UAVs), loitering munitions, intelligence, surveillance, and reconnaissance (ISR) systems, counter-drone technology, and Medium Altitude Long Endurance (MALE) platforms. The Defence Procurement Manual of 2025 restricts access to this procurement pipeline to domestic manufacturers, providing a substantial competitive advantage to companies like Ideaforge.

Operation Sindoor marked a turning point by elevating drone acquisition from a budgetary line item to an existential priority for Indian defense forces. With the largest-ever drone order exceeding ₹200 billion, the Indian Army has ensured several years of revenue visibility for suppliers. Ashika pointed out that electronic warfare (EW) resilience has become a standard procurement criterion, a space where Ideaforge has invested heavily.

Specifically, the company’s technology portfolio includes a Controlled Reception Pattern Antenna (CRPA) designed to counter jamming, a Visual Positioning System (VPS), and secure communication channels. These innovations were developed years before becoming mandatory, positioning Ideaforge ahead of many competitors. Management has indicated that positive field feedback might accelerate new orders starting from the third quarter of fiscal year 2027.

Financial Forecasts and Valuation

Ashika projects Ideaforge’s revenue to grow from ₹2,261 million in fiscal year 2026 to ₹4,252 million in 2027 and then to ₹8,084 million in 2028. This translates to annual growth rates of roughly 40%, 88%, and 90% respectively. Operating profit is expected to increase more sharply, with EBITDA rising from ₹48 million in FY26 to ₹685 million in FY27 and ₹2,349 million in FY28, pushing EBITDA margins from a mere 2.1% to over 29% in two years.

Adjusted profit after tax (APAT) is forecasted to shift from a loss of ₹170 million in FY26 to a profit of ₹206 million in FY27 and ₹1,459 million in FY28. Earnings per share (EPS) are expected to follow a similar trajectory, moving from a loss of ₹3.9 to positive ₹29.4 by FY28.

Technical Analysis Insight

From a technical perspective, Sachin Gupta, Vice President of Technical Research at Choice Equity Broking, noted that Ideaforge’s stock found support around its 200-day exponential moving average (EMA) near ₹692.77. This level aligns with support established in early May. The price action suggests buying interest at these lower levels and lays the foundation for a potential recovery.

However, momentum remains subdued, with the Relative Strength Index (RSI) at 41.53, below the neutral midpoint of 50. Resistance is identified near ₹782.88, where the 50-day EMA resides. Breaking above this resistance would strengthen the short-term outlook and possibly trigger further gains. On the downside, the 200-day EMA is critical support that traders will watch closely.

Investors are reminded that the views expressed by analysts are individual opinions and should be weighed alongside professional financial advice before making investment decisions.

Background on Ideaforge and India’s Drone Market

Ideaforge Technology is recognized as India’s leading listed drone manufacturer, catering primarily to defense, paramilitary, and police clients. The Indian drone industry is gaining prominence due to increasing defense modernization efforts and growing emphasis on indigenous production under government policies. With global geopolitical tensions and technological advancements, unmanned systems are becoming vital for intelligence gathering, surveillance, and combat operations. India’s policy framework encourages domestic innovation and manufacturing, creating a favorable environment for companies like Ideaforge to expand their market share.

The Fast Track Procurement initiative is a strategic move to accelerate acquisition cycles for critical defense equipment, including drones. This provides a steady revenue pipeline for domestic firms, supporting long-term growth and enhanced profitability. Investors tracking the defense technology sector may find Ideaforge’s positioning, technological edge, and solid financial outlook compelling as the company capitalizes on this expanding market.