Blab Business
ideaForge Shares Drop 9.5% After Q1 Margin Decline; JM Financial Lowers Rating Amid Sluggish Order Inflows
Shares of Indian drone manufacturer ideaForge Technology fell 9.5% over two days to trade at ₹809.10 on the Bombay Stock Exchange on Wednesday. The decline followed the company’s announcement that its gross profit margin for the first quarter ended 30 June 2026 had slipped 49 percentage points to 49 %, even though operating earnings for the June quarter were positive.
JM Financial, a domestic brokerage, downgraded ideaForge’s rating from Buy to Add and lifted its target price to ₹905 from ₹875. The downgrade was justified by the brokerage on the basis of a 100 % price run‑up in the last six months and the risk that order inflows may remain weak in FY27.
In its analysis, JM Financial noted that ideaForge’s order book at the end of the quarter stood at ₹257 crore, implying quarterly order inflows of only ₹11.2 crore. Both year‑on‑year and quarter‑on‑quarter inflows were lower than in the previous period. The brokerage expects order inflows to weaken again in FY27 before picking up in FY28 and FY29, with a projected aggregate inflow of ₹1,500 crore over those two years.
The company’s first‑quarter financials show a gross profit of ₹33.6 crore, up from ₹7.9 crore in the same quarter a year earlier, but a margin decline from 62 % to 49 %. Revenue from operations was ₹68.6 crore. Management said it had executed more than 20 % of its opening FY27 order book and was focused on completing delivery of that book by Q3, in line with customer timelines.
Chief executive Ankit Mehta explained that the higher operational procurement limits for field commanders under the Defence Production and Procurement Policy Directive (DFPDS) 2026 would accelerate procurement activities in Q3 and Q4 of FY27. He also noted that the civil side of the business typically shows regular cycles leaning toward Q3 and Q4.
Supply‑chain constraints have been cited by the company as a continuing challenge since the March quarter of FY26. Global component shortages and logistics delays have impacted the company’s ability to meet production targets, although management remains committed to delivering the FY27 order book.
JM Financial’s outlook for the next few years is optimistic about execution momentum. The brokerage expects gross margins to stay in the 50–55 % range in FY27, driven by high‑margin orders. It projects revenue growth at a compound annual growth rate of about 47 % from FY26 to FY29 as order inflows pick up in FY28 and FY29. EBITDA margins are forecast to rise from 2 % in FY26 to roughly 30 % in FY29, with profit after tax estimated at ₹27.6 crore in FY28 and ₹170 crore in FY29.
The backdrop for these expectations is the Indian Ministry of Defence’s planned ₹20,000‑crore drone procurement programme. The programme focuses on tactical and surveillance unmanned aerial vehicles (UAVs) and is expected to be procured through a fast‑track route with an 18–24‑month delivery window. Other opportunities under the programme are at various approval stages, which could delay awards to FY28/29.
In summary, ideaForge’s stock has slipped after a sharp margin decline, and JM Financial has downgraded the company amid concerns over weak order inflows in FY27. The company remains focused on delivering its FY27 order book, while the defence procurement programme and expected order inflows in FY28/29 provide a longer‑term upside. Investors will be watching the company’s upcoming earnings releases and any updates on the Ministry of Defence’s procurement schedule.
JM Financial, a domestic brokerage, downgraded ideaForge’s rating from Buy to Add and lifted its target price to ₹905 from ₹875. The downgrade was justified by the brokerage on the basis of a 100 % price run‑up in the last six months and the risk that order inflows may remain weak in FY27.
In its analysis, JM Financial noted that ideaForge’s order book at the end of the quarter stood at ₹257 crore, implying quarterly order inflows of only ₹11.2 crore. Both year‑on‑year and quarter‑on‑quarter inflows were lower than in the previous period. The brokerage expects order inflows to weaken again in FY27 before picking up in FY28 and FY29, with a projected aggregate inflow of ₹1,500 crore over those two years.
The company’s first‑quarter financials show a gross profit of ₹33.6 crore, up from ₹7.9 crore in the same quarter a year earlier, but a margin decline from 62 % to 49 %. Revenue from operations was ₹68.6 crore. Management said it had executed more than 20 % of its opening FY27 order book and was focused on completing delivery of that book by Q3, in line with customer timelines.
Chief executive Ankit Mehta explained that the higher operational procurement limits for field commanders under the Defence Production and Procurement Policy Directive (DFPDS) 2026 would accelerate procurement activities in Q3 and Q4 of FY27. He also noted that the civil side of the business typically shows regular cycles leaning toward Q3 and Q4.
Supply‑chain constraints have been cited by the company as a continuing challenge since the March quarter of FY26. Global component shortages and logistics delays have impacted the company’s ability to meet production targets, although management remains committed to delivering the FY27 order book.
JM Financial’s outlook for the next few years is optimistic about execution momentum. The brokerage expects gross margins to stay in the 50–55 % range in FY27, driven by high‑margin orders. It projects revenue growth at a compound annual growth rate of about 47 % from FY26 to FY29 as order inflows pick up in FY28 and FY29. EBITDA margins are forecast to rise from 2 % in FY26 to roughly 30 % in FY29, with profit after tax estimated at ₹27.6 crore in FY28 and ₹170 crore in FY29.
The backdrop for these expectations is the Indian Ministry of Defence’s planned ₹20,000‑crore drone procurement programme. The programme focuses on tactical and surveillance unmanned aerial vehicles (UAVs) and is expected to be procured through a fast‑track route with an 18–24‑month delivery window. Other opportunities under the programme are at various approval stages, which could delay awards to FY28/29.
In summary, ideaForge’s stock has slipped after a sharp margin decline, and JM Financial has downgraded the company amid concerns over weak order inflows in FY27. The company remains focused on delivering its FY27 order book, while the defence procurement programme and expected order inflows in FY28/29 provide a longer‑term upside. Investors will be watching the company’s upcoming earnings releases and any updates on the Ministry of Defence’s procurement schedule.
