Ideaforge Technology Ltd (IDEAFORGE) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day and welcome to the Q2 and H1 FY '27 earnings call of ideaForge Technology Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guaranteed not the guarantees of future performance and involves risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Moderator: you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit Mehta, co-founder and CEO of ideaForge Technology Limited. Thank you, and over to you, sir.
Ankit Mehta (Ideaforge Technology Ltd): Good morning, everyone, and thank you for joining us for ideaForge's Q2 and H1 FY '27 earnings conference call. I'm joined today by our CFO, Mr. Vipul Joshi, and our VP of Engineering Rahul Singh, and SGA, our Investor Relations team. Building on the steady start of the year in Q1 FY '27, the first half of FY '27 has been marked by continued execution of our order book, improvement in financial performance, and meaningful progress across our technology and product development programs. In H1, we executed over 50% of our FY '27 opening order book while achieving our highest ever H1 revenue of approximately 160 crore. During Q2, we achieved revenue from operations of approximately 91 crore, representing sequential growth over the previous quarter and returned to profitability at the PAT level. We have maintained this execution momentum despite persistent global supply chain constraints and certain delays in customer approvals for deliveries. These challenges remain and our teams continue to work closely with suppliers and customers to minimize their impact on our delivery commitments. As we progress through our existing order book, securing fresh orders remains an equally important priority. We see meaningful opportunities emerging across defense and civil markets, supported by evolving customer requirements, new procurement initiatives, and an expanding range of applications for unmanned systems. Alongside execution, we have continued investing in technologies, products, and capabilities that we believe will drive our future growth. These investments reflect an approach we have followed consistently over the years through both favorable and challenging market conditions. Before discussing the developments during the quarter, I would like to share some perspective on this approach and how it has shaped ideaForge's journey. One of the defining characteristics of our business is that technology and product development often precede market demand by several years. At ideaForge, we consistently focus on identifying emerging customer needs and technology trends early, investing ahead of demand, and building capabilities and capacity to deliver when opportunities materialize. We have remained committed to this approach even through challenging market cycles. In our experience, investments in new product and technology development have converted into multifold revenue generation vis-a-vis the invested value. Therefore, we believe our sustained and growing investment in product development is a strong sign of exponential growth potential. Electronic warfare resilience is a good example. We began investing in these capabilities well before they became critical customer requirements. When the need emerged, we already had indigenous technologies ready for demonstration, validation, and deployment, yielding meaningful revenue, realization, and competitive advantage. While we cannot control procurement cycles or macroeconomic conditions, our ability to anticipate requirements, sustain investments, and maintain execution readiness positions us to respond faster when market opportunities emerge. Given the dynamic geopolitics and evolving threat environment, we believe that continuous innovation and preparedness for surge demand are appropriate strategic measures. I would now take you through the progress we have made across our technology and product portfolio. Let me begin with ZOD, where we have made significant progress in both long-range ISR, which is intelligence, surveillance, and reconnaissance, and combat capabilities. As discussed in previous calls, our expansion into combat UAVs is an important strategic priority. Modern battlefield requirements are evolving beyond intelligence,
Ankit Mehta (Ideaforge Technology Ltd): that can also deliver combat effects in an integrated manner. We see this as a natural extension of our technology and platform capabilities, and we are actively building a portfolio to address both ISR and combat requirements. During the quarter, we made progress on the development of ZOLT Hybrid, incorporating an internal combustion engine for extended endurance. In field testing, the platform demonstrated long range ISR capabilities of up to 100 km and 6 plus hours of flight time with an advanced ISR payload and electronic warfare resilience. Importantly, we have also made tangible progress in our combat UAV roadmap. In October, we launched the ZOLT UCAV variant, introducing combat capabilities to the platform. This expands ZOLT's applications beyond surveillance into tactical combat roles, including air-launched precision effects. Our combat development efforts extend beyond ZOLT. We are progressing capabilities across air-launched effects, loitering munitions, one-way attack systems, long-range strike platforms, targeting, and autonomous hunter-killer configurations, where an ISR platform can identify a target and relay its coordinates to a combat system. These programs are being advanced through a combination of in-house development and strategic partnerships. We have made significant progress across these programs during the first half, and our focus is now on maturing the relevant systems and preparing them for customer field trials in H2 FY27, including participation in emerging fast-track procurement opportunities. What gives us confidence in this expansion is the foundation we have built over the years in resilient communication, navigation, autonomy, payload integration, and related critical technologies. Several of these capabilities are already deployed in our ISR platforms, and we are leveraging this experience while developing the additional systems and integration capabilities required for combat applications. Beyond these developments, we continued field testing of our next-generation multi-rotor prototypes and made design improvements to the SWITCH family aimed at enhancing speed, endurance, and wind resistance. On electronic warfare resilience, our deployed systems continue to provide valuable feedback in the field, help us strengthen our capabilities against evolving threats. During the quarter, we advanced higher antenna count CRPA configurations for improved jamming resistance and continued developing navigation approaches combining inertial navigation, Visual SLAM, and satellite image matching. We also progressed edge AI capabilities for object detection, classification, and tracking alongside improvements in payload image quality. These efforts are informed by our experience from over one million flights completed by our customers. Moving to YETI, our logistics UAV program, we continued testing and tuning the first technology demonstrator and initiated indigenous development of key propulsion system elements for the next demonstrator, and are working with our partners. We also signed an agreement with the Technology Development Board for 151 crores in debt funding under the Government of India's RDI scheme. This supports the continued development and validation of YETI as we progress towards the next technical milestones. Finally, on FlytCloud, we continued strengthening our software and analytics capabilities. During the quarter, we released automated stockpile monitoring and report generation capabilities, while advancing AI-powered video analysis, intelligent search, operational dashboards, regional language support, and geospatial analytics. We also improved our mobile and web applications for Drone-as-a-Service requests and live video streaming. These developments support our broader effort to deliver integrated solutions across platforms, payloads, software analytics, and services, enabling customers to derive greater value from their drone operations. Let me now turn to the market opportunities emerging
Ankit Mehta (Ideaforge Technology Ltd): across these categories, and how we are positioning ourselves to capture them. We continue to see encouraging developments across defense procurement, both in centralized acquisition programs and at the command level. As we execute our existing order book, replenishing it remains a key priority. We see opportunities across our established ISR and mapping platforms, as well as the combat UAV segment, where we are expanding our capabilities and product portfolio. As discussed in previous calls, the estimated 20,000 crore fast track procurement opportunities across ISR and combat UAV categories represent a significant development for the industry. We are seeing progress across these programs. The first tender is at an advanced stage of evaluation. The Defence Acquisition Council has recently cleared proposals from defense services worth 2.12 lakh crore, including programs for long range UAS, surveillance UAV, integrated surveillance and strike systems, and long-range kamikaze drone systems. And we are expecting RFPs for these opportunities soon. Several other opportunities are progressing through the approval process. Growing emphasis on combat and tactical unmanned systems is particularly relevant to us given the investments and progress we have made in expanding beyond ISR. We are currently actively preparing our platforms and capabilities for participation in the relevant procurement programs. Alongside these larger programs, the enhanced procurement powers for field commanders under the delegation of financial powers to defense services 2026, we are expected to support increased procurement activity at the command level compared to historical levels. While the timing of procurement approvals, evaluations, and awards remain outside our control, the direction of demand is encouraging and unprecedented in the Indian drone industry's two-decade-long journey that started with us. Alongside domestic defense opportunities, we continue to expand our presence across domestic, civil, and international markets across government and enterprise applications, including recurring revenue opportunities, providing another avenue for order generation and business diversification. During the quarter, our UAVs were deployed by law enforcement agencies for AI-enabled crowd monitoring and public safety at multiple large religious gatherings. We also successfully conducted product demonstrations for prospective customers in South America and are pursuing these engagements towards commercial opportunities. On the US front, as recently disclosed, we have mutually terminated proposed joint venture agreement with Force Breach. The joint venture had not been operationalized, and no capital was contributed. Our commitment to the US market remains unchanged, and we continue to pursue certification, demand generation, and order fulfillment initiatives independently through our wholly owned US subsidiary and a portfolio of promising partnership opportunities. That covers the key developments across our technology, products, market opportunities, and customer segments. I will now hand over to our CFO, Vipul Joshi, who will take us through our financial performance for the quarter and the first half, followed by our priorities for the remainder of FY '27. Over to you, Vipul.
Vipul Joshi (Ideaforge Technology Ltd): Thank you, Ankit. Morning, everyone. Thank you for joining us today. As Ankit highlighted, the first half has been strong order book execution and improvement in financial performance despite continuing supply chain delivery challenges. Our focus remains on sustaining the momentum, replenishing the order book, and transiting our investments and emerging opportunities into consistent revenue and profitability. With that, let me take you through our financial performance for Q2 and H1 FY '27. For Q2 FY '27, consolidated revenue from operations stood at INR 91.3 crores, up by 124% year-on-year basis and 33% on sequential basis. Gross profit stood at INR 49.6 crores, registering a growth of 143% year-on-year and 47% on a sequential basis, with a gross margin of 54.3% compared to 50% in Q2 last year and 49% in Q1 FY '27. As discussed in previous calls, gross margins vary depending on the mix of products delivered during each quarter. EBITDA for the quarter stood at INR 23.2 crore
Vipul Joshi (Ideaforge Technology Ltd): with an EBITDA margin of 25.4%, compared to a loss of INR 8 crores in the corresponding quarter last year, and a five-fold improvement on the sequential basis. Profit after tax stood at INR 6.5 crores, compared to a loss of INR 19.6 crores in Q2 FY26 and a loss of INR 2.6 crores in the previous quarter. Coming to the first half performance, we recorded our highest ever H1 revenue of INR 15 159.9 crores, compared to INR 53.5 crores in H1 of FY26. Gross profit for H1 stood at 80 INR 83.2 crores with a gross margin of 52%. EBITDA stood at INR 27.5 crores, compared to a loss of INR 23.1 crores in H1 last year. PAT for the first half stood at INR 3.9 crores, compared to a loss of INR 43.2 crores in the corresponding period last year. PAT for the first half stood at INR 3.9 crores, compared to a loss of INR 43.2 crores in the corresponding period last year. Our closing order book as of 30th September stood at 202.2 crores in the corresponding period, sorry to the compared to the corresponding period 25.6 crores in the Q1. Reflecting the continued execution of our existing orders, replenishing this order book remains an important priority as we progress to the second half. Looking ahead to the remainder of FY27, our priorities are completing our existing delivery commitments, replenishing the order book and advancing our newer platforms and capabilities towards commercialization. We see significant opportunities emerging across ISR and combat UAV categories supported by evolving operational requirements and procurement initiatives. Our immediate focus is on converting these opportunities into orders, while progressing our combat capabilities towards customer feed files and standard commercial readiness of our expanded portfolio. At the same time, with the RD&I funding support, we will continue progressing YETI against its development milestones and strengthening our software and services portfolio. As we mentioned earlier, our business has been built on anticipating customer needs, investing ahead of demand, and developing the capabilities to deliver when opportunities emerge. We believe these investments have placed ideaForge in a strong position to address the evolving market requirements. With that, we conclude our opening remarks, wishing you all a very Happy Diwali and season's greetings. Thank you for your attention. And we can now open the floor for questions.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. In order to ensure that the management is able to address all questions, kindly limit your questions to two per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abhijit Singh from Systematix. Please go ahead.
Abhijit Singh (Systematix): Yeah, thanks for the opportunity and congrats on a very strong results. First question is on the 150 crore funding that we are getting for YETI platform. So, sir why is this number 151 crore, is that the overall development expenditure that we are anticipating or or in addition to 151 crore, are we also putting in our own money in that? Also, what are the terms of this, is this a loan and if it is, what is the interest rate that we will to pay?
Vipul Joshi (Ideaforge Technology Ltd): So, thank you for the question Abhijit. RD&I funding basically is a matching principal grant that we have received where we also will have to equally put this similar amount of funds. This is the one particular program under the overall YETI specifications that we are developing at the moment. This particular is a debt form that we have received. It is for a period of roughly about 10 years, and for an interest of 4%.
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