Droneacharya Aerial Innovations Limited IPO Analysis

About the company

Droneacharya Aerial Innovations Limited is incorporated in 2017 and provides high - end ecosystem of Drone solutions for multi-sensor Drone surveys, data processing of Drone data using robust high-configuration workstations, Drone pilot training & specialized GIS training. Geospatial Information Systems (GIS) is a field that heavily benefits from using professional GIS mapping drones because of their capacity to collect information that can be utilized for geospatial data visualization.

The company’s services can be classified into below categories:

1. Training (DGCA Certified Drone Pilot, Drone Building, Aerial Cinematography & Aerial Making, and Drone data processing).
2. Services (Consultancy services to Govt. & private organizations, reality capture data processing software, anti-drone solution for rogue UAV and UTM air traffic management solution).
3. Surveillance (land surveying and underwater services).
4. Others

Core services offered by the company

Industry Outlook

The global Drones market is anticipated to reach US$ 30 Billion by the end of 2022, anticipated to experience an impressive 25% CAGR from 2022-2032 to reach US$ 279 Billion.

The immense potential of drones has led to their increasing adoption in India, too. Though both the industry and the market in India are at a very nascent stage at the moment, there is the immense growth potential for both. A major thrust will be given by the willingness of the present Indian government to use drones for a variety of purposes, including crop mapping and surveillance of infrastructure projects, pushing the projected value of the domestic industry to approximately US$421 million in 2021.

In an Interview (September 2021) of Chief of the Drone Federation of India, Mr. Smit Shah stated that on the back of the new policy, India’s drone market is expected to reach Rs. 50,000 crores (US$ 6.69 billion) in five years and Rs. 30,000 crores (US$ 4.01 billion) in the next three years.

The increasing market of drones will ultimately benefit the company as it is engaged in the training and consultancy of drones.

Financials

Valuations

As per the RHP, the company has only one listed peer which is Genesys International Corporation Limited

Since the company was in a loss for FY 21 PE multiple would not be a correct basis for comparison so if we look at the price to book value the company has priced the issue at ~2 times its book value at the upper price band and if we compare it with its peer then the PBV comes to ~4.54. So as per the book value, the issue seems to be reasonably priced.

IPO details and application

1. The IPO opens on 13^th December 2022and will remain open till 15^th December 2022.
2. The total issue size is Rs.33.97 crores which is a completely fresh issue.
3. The price band of the issue is Rs. 52 to Rs.54 per share and a retail investor can apply for a maximum of 1 lot with an investment of Rs.1,08,000.
4. As at the time of releasing this blog the shares of the company are trading in Grey market at Rs. 126, ie. GMP of 133% & the overall subscription is 49 times.
5. Applications in SME IPO can be made just like we do applications in Mainline IPO which can be either through UPI i.e., through your stock broker or ASBA