Ideaforge Technology stock soars 20% as defence drone demand rises, despite FY25 losses

Why Did Ideaforge Technology Stock Rally 20% Despite a Q4 Loss?

In a dramatic rebound, Ideaforge Technology Limited surged 20% on May 10, 2025, to close at ₹463.50, hitting its upper circuit and topping the BSE gainers’ chart. The rally came despite weak quarterly earnings and was driven primarily by renewed institutional interest, a short squeeze in the derivatives segment, and intensified market optimism over upcoming defense orders linked to India‘s cross-border operations under Operation Sindoor.

As geopolitical tensions with Pakistan continue to escalate, the Ministry of Defence is reportedly expediting contracts for surveillance and reconnaissance drones. Given its dominant footprint in India’s unmanned aerial systems (UAS) market, Ideaforge is seen as a strategic beneficiary of this sudden uptick in tactical drone procurement.

The surge also coincided with intraday volumes exceeding ₹515 crore and triggered fresh derivative rollovers, suggesting both short-covering and aggressive new long positions by institutional investors betting on government-led demand revival.

How Did Ideaforge Perform in Q4 FY25 and Full-Year FY25?

Despite the bullish stock action, Ideaforge’s financial results for Q4 FY25 revealed operational challenges and a slowdown in revenue conversion. For the quarter ended March 31, 2025, revenue from operations stood at ₹203.1 million, down a steep 80% from ₹1,023 million in Q4 FY24. Gross profit during the quarter came in at ₹72.9 million, with gross margins narrowing to 35.9% from 43% a year earlier.

EBITDA losses widened sharply to ₹174.1 million, translating to an EBITDA margin of -85.7%, compared to a profit of ₹202.5 million and a margin of 19.8% in Q4 FY24. The net loss for the quarter amounted to ₹257 million, against a net profit of ₹103.3 million during the corresponding period last year.

For the full financial year FY25, Ideaforge reported revenue of ₹1,612.2 million, nearly halving from ₹3,140 million in FY24. Gross profit for FY25 stood at ₹531.8 million, and the company ended the year with a net loss of ₹622.7 million, reversing its FY24 profit of ₹452.7 million. Full-year EBITDA margin contracted to -19.6% compared to 27.4% in the previous year.

What Does Management Say About the Weak Results?

CEO Ankit Mehta acknowledged the sharp revenue drop and noted that the slowdown was primarily due to general elections during H1 FY25 and delays in procurement cycles. Despite the challenges, he said the drone sector began regaining traction in Q4 as the government moved forward with emergency procurement programs—particularly under the Counter Insurgency and Counter Terrorism (CICT) vertical.

Mehta also highlighted that many of the pending tenders had progressed into the final L1 stages by March-end, setting the stage for a rebound in FY26. The company is positioning itself to capitalize on both civil and defense opportunities, having expanded its product portfolio and geographic footprint.

What Strategic Initiatives Did Ideaforge Undertake in FY25?

During FY25, Ideaforge aggressively moved to evolve from a pure drone manufacturer into a complete drone solutions provider. The company introduced key products such as NETRA 5 and SWITCH V2 and unveiled early concepts like ZOLT (tactical drone) and YETI (logistics drone).

Ideaforge also formed strategic alliances to support innovation and market expansion. The investment in U.S.-based Vantage Robotics marked its entry into nano drone platforms (<250 grams), boosting its global competitiveness. Additionally, the firm joined hands with Resonia Limited (Sterlite Group) for deploying drone logistics in energy and tower installations.

In the civil sector, Ideaforge collaborated with the Survey of India to host AAYAM 2025, an event aimed at geospatial mapping transformation. The company also secured RPTO certification from DGCA, enabling UAV pilot training, further deepening its ecosystem engagement.

How Is Ideaforge Positioned Within India’s Defence Drone Ecosystem?

Ideaforge retains its position as the dominant player in India’s UAS market and is considered a top beneficiary of tactical drone spending. The company was ranked third globally among dual-use drone manufacturers (civil and military) in 2024 by Drone Industry Insights. It boasts the largest operational deployment of indigenous UAVs in India, with over 650,000 drone flights completed across defense, infrastructure, and mapping missions.

In FY25, 96% of its revenue was derived from defense contracts, underscoring its dependence on government budgets and military procurement cycles. However, with new platforms and collaborations, the company is gradually increasing its footprint in civil and international markets.

Notably, Ideaforge hosted defense delegations from over 28 countries at AeroIndia 2025, suggesting growing international demand for its UAV solutions.

What’s Driving Institutional Sentiment and Stock Momentum?

The current stock rally is underpinned by more than just a reactive geopolitical event. Market participants view Ideaforge as a structurally sound long-term play on India’s defense self-reliance push, especially under the ‘Make in India’ and Atmanirbhar Bharat initiatives. The alignment of MoD procurement plans with domestic manufacturers has strengthened the outlook for firms like Ideaforge.

The short squeeze observed in the derivatives market indicates that investors were caught off guard by the rapid demand resurgence, leading to rushed buybacks of short positions. At the same time, FII flows into defense-aligned midcaps have accelerated, and Ideaforge’s volumes on May 10 reflected renewed institutional accumulation.

What’s the Future Outlook for Ideaforge?

While FY25 was marred by order deferrals, analysts expect the company’s topline and profitability to recover in FY26, driven by expected order closures under the emergency CICT programs and global exports. The company’s CEO also hinted at an “increasing momentum toward international opportunities and partnerships,” suggesting that foreign defense agencies could soon contribute to the revenue mix.

With government procurement tenders moving into final stages, Ideaforge may announce significant contract wins over the next two quarters. Moreover, its diversified solutions, such as Drone-as-a-Service (DaaS) platforms, FLYGHT DOCKS, and FLYGHT CLOUD for analytics, could unlock new civil revenue streams beyond FY26.

Sentiment Summary and Institutional Activity

Investor sentiment around Ideaforge has shifted decisively from skepticism over delayed earnings to optimism over future defense procurement. Despite disappointing margins and PAT performance in FY25, institutions appear to be front-running a policy-led earnings recovery in FY26.

The company’s 20% surge, high delivery volumes, and derivatives action confirm broad-based institutional confidence and signal renewed positioning ahead of order finalizations. If announced orders materialize as expected, the company may see upward EPS revisions and stronger earnings multiples.