About the company

Founded in 2017 by Mr. Prateek Srivastava, DroneAcharya Aerial Innovations Limited is one of the early movers in India's drone industry. The company has established itself as the leading provider of drone-based solutions, specializing in data acquisition and analysis across different sectors like agriculture, forestry, defense, oil & gas, and infrastructure. DroneAcharya has established 3 franchises in Jabalpur, Jaipur, and Noida to expand its reach across India.

DroneAcharya holds a leading position in India’s drone technology sector, with a market share of 15% in drone training services and 10% in drone-based data solutions. The company has evolved into a comprehensive data solution provider, pioneering end-to-end Aerial and Geospatial solutions in the Indian UAV (Unmanned Aerial Vehicle) industry. DroneAcharya distinguishes itself through its training programs, being the first company to train 500 DGCA-certified drone pilots and completing over 325 DGCA drone pilot training programs in a single year.

A key milestone for DroneAcharya was its successful listing on the BSE SME platform in December 2022, becoming India’s first publicly listed drone company. The IPO was oversubscribed by 262 times, raising INR 34 Cr.

FY24 Financial Performance

• Revenue from operations grew by 90% YoY from INR 18.57 Cr. in FY23 to INR 35.28 Cr. in FY24.

• EBITDA grew by 106.11%, from INR 4.99 Cr. in FY23 to INR 10.28 Cr. in FY24.

• The EBITDA margin improved from 26.85% in FY23 to 29.13% in FY24.

• PAT increased by 79.18%, from INR 3.42 Cr. in FY23 to INR 6.13 Cr. in FY24.

• The diluted EPS saw a healthy growth of 44%, rising from INR 1.77 in FY23 to INR 2.55 in FY24.

Promoters' Analysis

Mr. Prateek Srivastava (Age 38) – Managing Director:

• Founder member and driving force behind DroneAcharya.

• Holds a 23.4% stake in the company.

• Holding an M. E. Degree in Remote Sensing and GIS from Asian Institute of Technology, Bangkok

• Over 10 years of experience in the drone technology sector.

• Nominated as AsiaOne 40 Under 40 Most Influential Indians 2018-19.

Mangina Srinivas Rao (Age 55) – Independent Director

• He has more than 3 decades of experience in corporate Agri-businesses, business for development (B4D), and fostering entrepreneurship in India, & countries of South Asia and Sub-Saharan Africa.

• Graduated from Delhi University, his MBA from the Asian Institute of Management (Philippines), and multiple other specialized courses from IIM-A, ASCI, Cornell University, and Kansas State University.

Ms. Nikita Srivastava (Age 34) – Director:

• Plays a crucial role in the company's management and strategy.

• Holds a 4.8% stake in the company.

• Nikita has extensive hands-on experience in HR Generalist affairs, with more than 12 years of experience in Human Resources

Mr. Harshal J Kher was appointed as the CS (Company Secretary) in February 2024, strengthening the corporate governance.

Business Insights

DroneAcharya Aerial Innovations has strategically positioned itself as a comprehensive drone solutions provider, with a diverse portfolio catering to both domestic and international markets. The company's revenue streams are primarily derived from 3 key offerings:

• Droneacharya X1 Pro Drone (35% of revenue): This flagship product signifies DroneAcharya's foray into drone manufacturing. Designed for various applications like surveillance, security, and cinematography, the X1 Pro caters to a wide range of industries. The company's strategic focus on "Make in India" initiatives and securing international supply orders, as evidenced by the INR 15.01 Cr. deal for 5,000 FPV drone kits, highlights the growth potential within this segment.

• Aerial Mapping and Surveying Services (28% of revenue): Leveraging its expertise in drone technology and data analytics, DroneAcharya provides high-quality aerial mapping and surveying services. This segment has garnered significant traction, illustrated by the work order secured from the United Kingdom. Growth opportunities lie in expanding service offerings to new industries and geographical markets.

• Droneacharya Flight Training Program (20% of revenue): As India's leading DGCA-certified drone pilot training organization, this program is crucial to DroneAcharya's portfolio. The company's commitment to addressing the burgeoning demand for skilled drone pilots is evident in its strategic partnerships with institutions like IIT Ropar and Rashtriya Raksha University and procuring 200 Type Certified training drones.

DroneAcharya secured several high-value contracts, including:

• International Projects: INR 10.48 Cr. for a drone-based project in Qatar's oil and gas sector and INR 4.67 Cr. for drone and GIS data processing in the United Kingdom.

• Domestic Projects: Notable contracts include an INR 1.41 Cr. tender from DRIISHYA, Govt of Haryana, for a high-end survey drone and an INR 96 L tender for training 240 officials from the Karnataka Forest Department

• Defense Sector: Multiple tenders for FPV drone supply and training to Indian defense organizations.

Key Drivers and Investment Thesis

• Strong Growth and Profitability: DroneAcharya achieved a remarkable 90% increase in revenue and an 81.35% increase in PAT during FY23-24.

• Government Initiatives: The company benefits from government initiatives like the Production-Linked Incentive (PLI) scheme and the liberalized drone rules, which are expected to drive the Indian drone market to grow at a CAGR of 20% over the next 5 years. The announcement of Drone Shakti in the Union Budget 2022 to promote 'Drone-As-A-Service’ (DrAAS) further increased the scope of growth.

• Capex and R&D: The company is investing INR 10 Cr. in indigenous drone manufacturing to support the "Make in India" initiative, aiming to produce 500 drones annually by 2025.

• Diverse Client Base: DroneAcharya targets a wide range of industries, including agriculture, energy, infrastructure, and defense, providing a diversified revenue stream.

• Comprehensive Service Offerings: The company offers a full suite of services, including drone training, drone-as-a-service, data-as-a-service, and drone hardware manufacturing. Its focus on drone pilot training is significant as the Indian market will need 100,000 drone pilots by 2025.

• Expansion and International Presence: Demonstrating its global ambitions, DroneAcharya is strategically expanding its operations in the Middle East, United Kingdom, and Southeast Asia. The company is also securing international drone projects.

Valuation and Recommendation

We forecast INR 8.85 EPS for FY26. While the current PE multiple for Droneacharya is ~50x, we conservatively value Droneacharya Aerial Innovations Limited at 30x FY26 EPS at INR 265.

We assign a “Buy” Rating to Droneacharya with an upside of 85% in the next 18-24 months based on leading market share in Drone Training and DaaS, exponential sales growth, and supportive government policies.

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Disclaimer:

Mool Capital Limited is a SEBI Registered Research Analyst having registration no. INH000012449. This report has been prepared by Mool Capital Pvt. Ltd. and is solely for information of the recipient only. The report must not be used as a singular basis of any investment decision. The views herein are of a general nature and do not consider the risk appetite or the particular circumstances of an individual investor; readers are requested to take professional advice before investing. This document is not, and should not, be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments. This report should not be construed as an invitation or solicitation to do business with Mool Capital. Mool Capital and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.