Ideaforge Technology Limited (IDEAFORGE) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the IdeaForge Technology Limited Q1F527 Earnings Conference Call. 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. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Par Patel from MUSG End Time. Thank you and over to you.

Thank you and good morning. On behalf of MAFJ in time, I welcome you all to IDFOS Technology Limited, Q1 FY27 and his conference call. From the management side, we have Mr. Ankit Mweta, Chief Executive Officer and Hold-Time Director, Mr. Vipul Joshi, Chief Financial Officer and Hold-Time Director. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on our Exchange and Companies website. A short disclaimer I would like to say before we begin the call. This call may contain some of the forward-looking statements, which are completely based upon our belief, opinion, and expectations as of today. These statements are not a guarantee of our future performance and may involve unfortunate risks and uncertainties. With this, now I hand over the call to Mr. Ankit Mehta. Over to you, sir.

Thank you. Good morning, everyone, and thank you for joining us for IdeaForge's Q1-FI27 earnings conference call. I'm joined today by our CFO, Mr. Vipul Joshi, and our investor relations team. I will begin with the highlights of the quarter, progress on our key developmental programs, and how we are positioned for the year. After a muted FY25, the Indian-owned industry witnessed demand revival in FY26, and many of our long-term bets and investments were materialized into our order book and financial performance. While F526 was a turnaround year after a short blip in F525, F527 so far has been about building on that foundation that we have created over the years. Quarter 1 marked a steady start to the year, supported by continued execution and advancement across key strategic developmental programs. Let me start with a few highlights. First, We delivered more than 20% of our FI27 opening order book, recording revenue from operations of 68.6 crores, and closed the quarter with a positive EBITDA. Second, we have made significant progress on our key developmental programs, advancement on combat capabilities like air launch effects and fuel hybrid long endurance capability for Zolt. The first technical demonstrator of Yeti completing the third hover test, multiple market-ready developments on FlightCloud, improvements on EW Resilience Stack, and DGCA-type certification for our Q6 V2 Geo UAV. Third, our deployed UAV fleet crossed 1 million customer missions. These missions were carried out in some of the most challenging terrains and conditions, providing us with learnings that help us drive our product and technology development efforts. Fourth, we secured the capital required to fuel our next phase of growth. Raising 500 crores through a qualified institutional placement and receiving a letter of intent for financial assistance of up to 151 crores for our middle mile logistics UAV Yeti under the Government of India's RDI scheme. Fifth, the demand environment moved in a positive direction with an announcement of 20,000 crore worth of drone procurements through fast-track mode. And substantial expanded delegation of financial powers to Defense Forces Field Commanders, signaling towards increased procurement activities in FY27 and onwards. Let me take each of these forward. On the execution and order book front, we entered FY27 with an opening order book of more than 300 crores. And our priority for the year is conversion of the opening order book into revenue. We delivered more than 20% of the same in the first quarter. We also reported a positive EBITDA, marking another quarter of improving financial performance. While global supply chain disruptions and component availability continue to pose challenges, we remain focused on completing delivery of the remaining hotbook of 256.8 crores by Q3 as per customer timelines. Coming to the technology and product side, our approach to new products and technology development has been to own the consequential technologies and deliver a complete solution to our customers. At IdeaForge, we have always focused on engineering ownership on the layers that are most difficult with and replicate, and also turn out to be the most consequential for real missions and business health. The consequential technologies in the present context include resilient communication systems that can withstand jamming, resilient navigation systems that can operate despite jamming and spoofing attempts, secure command and control software, edge compute for intelligence, and specialized mission payloads. This approach provides a significant cost advantage as compared to the competition's need to use state-of-the-art imported technology. It gives us technology sovereignty and reduces exposure to denial or withdrawal of technology and sabotage threats. It allows us to adapt faster when customer requirements evolve rapidly and retail control over the security and performance of the system. Along with this, we have built several layers of technology like Bluefire Touch ground control software for real-time mission control. FlightApp and FlightWeb for remote drone flight requests and real-time monitoring, and FlightCloud for data storage, post-processing, AI analytics, reports, and automation to provide complete solutions to our customers. This enables customers to adopt secure and resilient mission-critical UAV platforms. That can also deliver final outcomes without needing the customer to orchestrate between multiple providers for all of these necessary but complex layers. In Q1, we made significant progress in the development of combat drone capabilities like air launch defects and fuel hybrid long endurance capability for Zolt. We are also in advanced stages of developing combat capabilities like long-range strike platforms and loitering munitions along with our partners. With these new capabilities and our in-house strength around resilience communication infrastructure for collaborative autonomy, we would be targeting to participate in the upcoming large opportunities from Indian Defense Forces. Yeti achieved its first technical demonstrator milestone, completing a third hover test with all subsystems integrated, with the second technology demonstrator already in the design phase. RQ6 V2GO received DGCA-type certification, opening up advanced GIS use cases across large-scale mapping, urban planning, and digital twin applications. Six of our UAV platforms are now type-certified by DGCA. Furthermore, we developed and released market-release capabilities on FlightCloud, including automated video summaries, AI-enabled event annotation and event search, and workflow automation for several use cases. This intelligence layer from FlightCloud helps turn raw aerial data From hours of drone flights into insights that our customers can act on. In Q1, we also strengthen our electronic warfare resilience technology stack, extending our advantage in the ecosystem. As more... Procurement programs make EW Resilience and GNSS-denied navigation mandatory. Our continuous development efforts on this front convert into a stronger competitive position. Many of these developments start as an experiment, which we have started to showcase to IdeaForge Labs. In Q1, we showcase multi-UV operations across mixed-platform strategies. Air launch effects, where one platform deploys another mid-flight munition drop, and tactical deployment trials. These are experiments rather than released capabilities, and that is precisely their purpose. Labs is our way to share that experimentation never stops at IdeaForge. I am related to share that during the quarter, our deployed fleet crossed the milestone of 1 million customer missions. Across our fleet today, an idea-forged drone takes off somewhere in the world every two minutes. These are real missions flown by real operators in challenging conditions. From altitudes higher than the Siachen Glacier, temperature as low as those found near both the poles, to the high temperatures of Middle East and the Thar Desert, to operating in the coastal environments in the open sea. And now, even in EW-contacted environments, each one has fed something back to our engineering and the choices we make in product development. With this field experience and a global patent portfolio of 112 patents filed, we continue to push the frontiers of UAV technology. To fuel all of these developmental efforts and our working capital needs, we have also strengthened the financial foundation of IdeaForge. We completed a qualified institutional placement raising 500 crores with participation from marquee, domestic, and global institutional investors. The proceeds are directed towards product development, working capital, and capability building. Separately, we received a letter of intent for assistance of up to 151 crore from the Technology Development Board for the advancement of our SD program under the Government of India's RDI scheme. It is a low-cost, long-term debt funding released against developmental milestones. We are among the first companies to be supported under this framework, which we read as a statement of where the country intends its capability to be built. The environment around us is becoming structurally more favorable, and the procurement frameworks are also now aligned to faster and broader adoption of drones more than ever in our nearly two-decade journey. On the capital procurement side, the reported opportunity pipeline is the largest our industry has seen. Public reports of 20,000 crores of drone procurement under the fast-track procurement route from the Indian Army are now seeing the light of the day. With one opportunity in the RFP stage, others remain in the approval pipeline with the expectation of RFPs in the second half of the year. Photo? The Defence Acquisition Council has cleared capital acquisition proposals worth 52,000 crores, including a jet-based Tamikaze drone system and a naval ship-borne unmanned aerial system, underscoring increasing importance of drones in the armed forces' plans. On the revenue procurement front, the Indian Ministry of Defence has nearly doubled the operational procurement limits for field commanders of Indian Defence Forces. Through revision of the Delegation of Financial Powers to Defense Services 2026, we are also getting positive signals from the field, and we believe that this development will action in procurement activities in Q3 and Q4. We continue to see regular cycles on the civil side of the business that aim towards increased procurement activities in Q3 and Q4. Let me now take you through the financial performance for the quarter. Revenue for the quarter stood at 68.6 crores compared to 12.8 crores in Q1 FY26. Gross profit stood at 33.6 crores compared to 7.9 crores in Q1 FY26, with a gross margin of 49% in the quarter and 61.7% in Q1 last year. EBITDA stood at 4.3 crores compared to INR negative 15.1 crores in Q1 F526. Patch stood at INR negative 2.6 crores compared to negative 23.6 crores in Q1 F526. Our order book as of June 30, 2026 stood at approximately 256.8 crores. We plan to execute and deliver this order book by Q3. Our focus for the rest of the year centers around a few key areas. We continue to focus on executing the open order book aligned with customer timelines. We will deepen ownership of critical technologies while further strengthening our ability to deliver complete solutions to customers across platforms, payloads, software, analytics, services, and lifecycle support. And lastly, we will expand into combat drones, enterprise applications, and international markets where our technology and operational experience provide a meaningful advantage. Thank you. We can now move to the Q&A.

Thank you very much. We will now begin the question-answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Dipen Vakil from Phillips Capital. Please go ahead.

Thank you for this opportunity, sir. So my first question is, so first of all, very elaborate, so thank you for that. And also one thing that I felt was missing was a commentary on your U.S. operations. So if you can help us with the scale-up that is happening in your export and U.S. operations, and what kind of market and opportunity size can we expect from your U.S. operations, and if you can give us some number around it.

Thanks, Dipen. So from the U.S. operations side, our focus for the present time has been shifting to two areas. One is that we are working with our partner to operationalize the JV that we have signed up over there. And secondly, we have a couple of regulatory approvals that we need to get, particularly around the Blue SUS certification. Which is the work in progress, because it's only after we get the certification, which has now become more open and application process as compared to earlier, that we will be able to gain substantial progress on the defense and federal side of the house in U.S. So, that's work in progress for us, and therefore, we are taking a little bit of time to fuel both the and work towards operationalizing the JV and the Blue West J certification. With respect to rest of the international market, we continue to look at partnership opportunities in Europe and Middle East, whereas in South America and Africa, we have live opportunities. We have our partners now looking to buy our what is known as not for resale units, NFR units. We have orders in for those as well now, but we are working towards increasing our presence in some of these geographies where we believe we can get more traction without the need for joint ventures alone.

Got it, Sushma. Any idea on the market size for the US space? What kind of market and opportunities can we expect once we get those approvals and all the certification?

See, many US programs that are coming up right now, like the conflict programs around drone dominance, etc., most of them run into several tens of thousands of crores, tens of thousands of dollars at this point in time. In fact, I feel that at least one of the programs that is live right now is about a $30 million program, where they have many players who will be participating. So, there are many such programs that are coming up again and again. There is a very rapid pace of adoption in defense right now that's happening there, and we are exploring towards participating in those, but these certifications, which do take time, come through as well.

Okay, got it, sir. So, my second question is on the lines of the order and flow that we expect going ahead, sir. So, while we have capabilities, we are field tested, and at the same time, we are getting funding from the government side of it also. But still, from the government side, while there is a requirement, orders are not coming in. So, where is the disconnect or where is the staff from the government expectations or from some criticality that order movement is slow, not only for you, but the entire drone space as a whole? So, can you help us understand that a little bit?

I think, like I mentioned, there are some opportunities that are already in the RFP stage. These are the large FTP opportunities, which have a specific cycle of conversion from approval at PPB to final order placement, whereas those large opportunities are in progress at various stages of approval within the armed forces. With respect to the run rate business on the revenue side, where the army commander's power have been enhanced, typical cycle of that business when there is no EP-linked timeline is roughly that they start proctifying around Q3 and Q4 timeline itself. So that's typical unless and until there is a EP program running.

So we'll expect a bunch of that at that time.

Mr. Dipen, we request you to rejoin the queue for a follow-up question. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we request you to rejoin the queue. The next question is in the line of Tushar Khurana from Peace Wells. Please go ahead.

Hi, thank you for the opportunity. My first question is regarding this. There was an article recently that I was reading that Indian Armed Forces have released the RFI for 2715 logistic drones. And as I understand, there is another company by the name of Blue J Arrow, which has also already very decently tested, tried tested their logistic drone. So I want to understand how Yeti is placed in this RFI that has been released by the Indian Army, and how different or similar is Blue Jay Aero Logistics done with Yeti, if you can add some comment on that.

So, this RFP that has come out that has largely focused on the altitude at which they want to operate these systems, as I understand, they have not yet looked at or specified they are seeking information from the market as to what capabilities are available in the market to serve at these altitudes. So, obviously, we will be responding to the RFI. However, in terms of your question around BlueJ, in my opinion, you know, there are not just BlueJ, but there are a lot of people who have been delivering and manufacturing logistics drones across the Indian ecosystem. I think what will matter is that at what altitude can people operate these systems at, and what is the max payload that they can carry, and up to what distance can that payload be carried. For example, Yeti, in my opinion, is the only platform in the world, from whatever we have searched, that is designed to take off at a 6,500 meters takeoff altitude. No other platform that we are aware of. As an ambition of this scale, neither have we seen too many efforts that look at that altitude carrying up to 200 kgs. Now, depending on the payload, the range of operation at 200 kgs might be restricted to 50 kilometers. At a payload of 50 kgs might extend up to even 200 kilometers. So, that is the kind of challenge that we have taken on Yeti. So, it is slated to be the most challenging, yet the most, you can say, required platform because logistics in those altitudes is the hardest problem that our forces have to face every day. Our vision with Yeti is to make the world flat. And whatever high altitude areas that exist in our country, if we can serve them from the Tarai at the fastest possible pace with high capability like this, I think we would have really changed the ecosystem and the game.

That's great to hear. So, just to follow up on this, how big opportunity size can this be for us if, say, the RFI which has been released for 2700, that's the beginning. So, what could be the opportunity size for us in this case, for yesterday?

See, Tushar, the thing is that right now it is at an RFI stage. We are not aware of... What is the final specifications at what altitude that the customers have finalized? All of it being required in the Yeti domain may also not happen. Therefore, it may be too early to comment on that. I just know that if this converts into a fast-track procurement case, budget for each fast-track procurement case is up to 2,000 crores. That's what happens in a fast-track procurement case, and capital procurement does not have a budget limit. So it will depend on which mode this comes through, and that will define the budget for the opportunity.

Okay, okay. And then my second question is regarding this first RFP LAN is already being out like you mentioned in your presentation. So for which category of the drones is this RFP for and have we also bid for it and are we going to bid for all the combat drones RFPs as well?

So this one particularly is centered around the hybrid variant of our Zolt platform. And, yes, we have participated in it, and we are also going to continue to put efforts towards participating in any combat-related platforms as well that come through within the category of systems that we build presently. We don't build for each and every category, so some we will have to let go for sure. And what is the title of the RFP which has been on? I think, again, it's an FTP opportunity. So, my assumption is that the budget would be up to the value that I had mentioned. In terms of the opportunity itself, it's an ISR opportunity presently, this one.

Okay. To answer it, it's heartening to see our current order book is 60% defense and 40% civil. So can you just help me understand the customers or whether it is government or private for the civil and in which segments are these civil ordered for? That's my last question.

So this was not the split of our order book. This was the split of the revenue we delivered. And in terms of customers, it is split between a few customers on the homeland security side, on the civil side, and some private customers as well.

And the current order book is how much difference and how much civil?

That we don't disclose at this point in time, Tushar, typically, but it's heavier towards defense.

Okay. Thank you. Thank you so much. Thank you so much. All the best. Thank you.

Thank you, ladies and gentlemen. I request you to limit your questions to two per participant. The next question is on the line of Nikhil Gupta from VAYU Capital. Please go ahead.

Thank you for the opportunity. Hi, Ankit. As always, it's nice speaking to you. My first question is on our combat capabilities. So, it's still not clear to me that are we still focusing on We are launching another combat from our existing platforms or adding missiles or munitions as a payload to our existing platforms, or we are also working on increasing our capabilities towards developing airframes, which are variant of existing platforms like Zolt and Switch.

Both, Nikhil, both. We're doing both. There are variants that we are creating of our quadcopter platforms that can act as kamikaze systems, as well as we are doing the evolution on the air launch defects. So if you look at the air launch defects, it's another drone only

carrying a mission which will go ahead and move the mission.

So essentially, when we do that, we are developing an airframe that can actually go ahead. Act like a kamikaze system as well. So, I mean, when we do one, we do both as well. That's what happens.

Right. So, the last question is on... So our inorganic growth, so now we have done the QIP and also we can see that there is a lot of stalemate in the industry and there is a lot of participation. So are we looking on any inorganic growth? I mean, there are a few companies which may have similar DNA as ours and we may lack some capabilities. So I think we should go for some inorganic growth in that segment so that we can add our capabilities. We just wanted to know your opinion and your thoughts on the broader sense.

We are open, Nikhil. If we find a partner with the right mindset, the right capability depth, as well as the right value for the market, we are open. As you can see, the combination of the three is harder to find. And therefore, we continue to evaluate, but there is no specific target that we have in mind that fits both of all three of these because See, we build from first principles, and to build from first principles is a slightly harder problem than to system-integrate capabilities that others have built.

All right. Thank you so much for your answers.

Good luck. Thank you.

Thank you. The next question is from the line of Rajvil Singh from Vivek Investment Managers. Please go ahead.

Hi, Anjit. Thanks for the opportunity. My first question is on the combat drones and delivery missions and long-range strike platforms that you've spoken about. Can you help us understand whether these are still primary R&D and development programs or whether you are already seeing identified procurement opportunities and customer requirements? That is my first question. And my second question is that can you build a software plus autonomy mode? I mean, hardware can potentially become commoditized. So where do you believe Idea4's strongest long-term mode will reside? Whether it will be in EW Resilience, Autonomy, Communication, Software, or System Integration. So your thoughts on these?

Thanks, Rajveer. You know, IdeaForge, we decide to go after a domain. And once we decide to go after a domain, there are some experiments that you do to build foundational capability of that domain. And there are specific projects and programs that you deliver that will basically meet some of the customer requirements that are visible to us in the domain. So, you will see that our development is a mix of both. The platforms that we intend to create and develop need to be ones that we are aware of our customers wanting to deploy, and therefore, they are. that developmental effort. However, to initiate the development of a domain, you run some experiments which allow you to develop familiarity with the domain, and that you choose to do in the fastest possible way. So that's a mix of how development typically happens in any new domain for us. In terms of our moat, like I very clearly articulated during the call as well, my speech as well that Idea Forge looks at more in two domains. One domain is, in terms of hardware, what are the technologies that are not yet commoditized, and do we have control over those technologies or not? Are we going to pay a disproportionate premium to the market for acquiring those capabilities, or can we build them ourselves? Today, I am glad to report that we own most of the... We built consequential technologies along with having spent years building the technologies that were consequential at that point in time. For example, when we started IdeaForge, there was no autopilot company that could give us an autopilot that we could use. And nothing was available to us. So we built our own autopilot. We built our own regular communications. We can start around GNSS and communication. So, today we own communication, which is non-commoditized. We own GNSS United Navigation, which is non-commoditized, and we own payloads, which is a specialized domain as the class of the platforms goes up. So, we own the consequential parts of what is going inside a drone. So, we continue to keep a tap on what else could come up. The drone, which is not yet commoditized. Secondly, with respect to intelligence, there is no debate in my mind that ultimately we need to deliver an outcome to the customer. The customer is not getting their outcome merely by operating a drone. And therefore, the intelligence that enables and the orchestration that delivers a mission to the end customer, the mission outcome to the end customer is another stack that we work progressively on. And we now have a pretty robust stack for a few use cases that is also delivered. Now, because we have that stack, we deliver it as a drone as a service as well in many places. So, we are a mix of both, and I think both are important for a business like ours because while the technology will get commoditized in pieces, we will always continue to look at where the puck is going rather than where the puck has been to try and contain and retain a moat that is necessary for the market. It helps us in building tightly integrated, better performing, more reliable solutions for our end customers.

Perfect. Thanks for answering my question.

Thank you.

Thank you, ladies and gentlemen. I request you to limit your questions to two participants, as there are several participants waiting for their turn. The next question is on the line of Nido Palsk-Sahu from GM Financial. Please go ahead.

Hi, sir. Good morning. Am I on the screen?

Yes.

Oh, congratulations on the strong execution. I just wanted your thoughts on the ordering prospects. So how much of these prospects do you see converting like in the near term in 27, FI 27? Or do you see most of them getting pushed out to 28 and 29 given that they are still at the approval stage? And if you can quantify some of it.

See, we are expecting a lot more outcome from the revenue programs and the run rate programs in the present year. There are certain other opportunities which are not linked to any specific opportunity that, again, have visibility for the year. In terms of the programs around fast-track procurement, Some of them, as they get to RFP towards the end of the year, we will see a slip into FI28 for some of them. For at least a couple of them, we expect that the outcomes may happen within this year itself.

So, what in your assessment could be a ballpark quantum of influx that you are seeing convert to orders for the year?

That we are not presently projecting, Niloswal.

Oh, understood, sir. Understood. Also, I just wanted to understand since we did deliver a very strong execution on our challenging environment, are we seeing any major supply chain constraints in executing our sort of order book by Q3? Or those are largely procured?

Also, due to the current ongoing geopolitical conflicts, there is a pressure on the supply chain of thermal cameras, and the electronic supply chain also is seeing a certain pressure. When the timeline delays are happening, we are reviewing them very closely and getting prepared for deliveries on time for our customer timelines.

Got it. I got it. And also, just one last question. Anything on exports that we see materializing in this year? Aside of the opportunities in the U.S., we are still working on the certification.

Yeah, so like I said, we have seen good interest from partners across the world right now. Many of them are investing in our NFR systems as well. And, uh, therefore, uh, as we do more and more demonstrations and some of our live opportunities come to fruition as the year progresses, we should see some conversion, but, uh, I mean, we will continue to report as we get those orders in hand.

I request you to rejoin the queue for a follow-up question. The next question is on the line of Gaurav Chaudhary from Systematics Group. Please go ahead.

Yeah. Am I audible? Yeah, thank you for the opportunity. I'm Abhijit Singh from Systematics. And the first question is, so versus having more and more capabilities in-house in terms of a drone, like you mentioned in the previous comment about having communication and certain payloads now that we are doing in-house. Versus, let's say, five years back, we might have been outsourcing them. So, versus, you know, comparing these two scenarios where we have more and more capabilities in-house and have more of an integrated manufacturing, how do you see the competitive advantage in terms of bidding in both domestic and international markets from this perspective, having more and more your manufacturing capability for a drone? So if you can, you know, throw some color on how you think about this particular aspect.

So, in terms of having more and more of our own capability, it is very important to understand that we essentially do that for reasons that we find that the capability that we are trying to acquire from our partners or other providers in the market is available at a very high premium that we believe our customers cannot afford in the long term. And therefore, we invest behind those capabilities. Number two, in terms of manufacturing and partnering with other partners across the globe, we are continuing to build a more open ecosystem around us. For example, we support third-party payloads on our platforms. We are, in order to participate in a collaborative manner, we have a lot of variants we can create because We are happy to have our partners and their systems integrated into our systems if there are opportunities that require us to do that kind of a partnership. So, we are not as... I'm concerned about it being a bottleneck for any of the expansion of other areas because we are open. We will partner with people with the right capabilities for the right applications. At the same time, having control over some of these things as a core part of what we do gets the benefits like we mentioned. We can be more competitive as well as we don't have dependencies that can cause denial or risk that usually some of these platforms have started to show up as in the global ecosystem and environment.

Yeah, sir, understood. So what is the current level of indigenization that we have? Let's say we do 100 rupee product, what is the kind of value that gets imported for the components there? And how much do we do in-house versus that?

Last year's number.

So roughly about, you can say, 20-22% of our revenue is an import substitute, and you can say our internet content across our product line is roughly about 60-65%.

65% of the imported? No, in the US content. Okay, all right, all right. Thank you, sir. I'll get back in queue.

Thank you. The next question is in the line of Alisha Mahawala from Trust Mutual Funds. Please go ahead.

Hi, sir. Good morning. I have an earlier question, but I don't think it's out of scale. Could you see challenges with the...

Alisha, apologies. Your voice is not very clear.

I hope I'm audible now.

Yes.

So my question was that since it is the challenges or the pressure we've seen in Q1 with respect to cross margin and the fact that we're looking at executing the order that we have over the next two quarters.

No, so Alisha, if you see the product mix was more, it was, see our usual product mix, like for example, last year was 70-30. And this quarter, it was 60-40, which is the kind of variation that happens in our business because of what we deliver in a specific quarter. Today, because EW resilience is a necessity on the defense side, that business has more margin contribution than the civil business, which is not delivering an EW resilient product. And therefore, you see a little bit of gross margin movement there, but it is not going to substantially move us away, like we had mentioned from the 50-55% odd number that we had given for the year as a blended expectation. So, we do not expect that number to be shifting on an overall basis. Quarter on quarter, like in our business, it depends on the deliveries and stuff that we're doing. So a little bit of color on that hopefully helps resolve that. So there is no pressure in that one sense on the overall GM expectation because of the challenges. It's just timeline of supply that we are struggling with sometimes.

Sure. And all the materials that is required to execute this order book over the next two quarters, that is in place. We won't see any delays because of the supply chain disruption.

We're not anticipating delivery delays as of now. As I also answered in the previous question, that there are challenges in terms of thermal supply chain and some of the electronic supply chains' overall timelines are shifting. But as of now, it is not impacting our overall time commitments to the customers.

Okay.

Thank you. Thank you. The next question is from the line of Midhun James from Mode PMS. Please go ahead.

Hi, thanks for the opportunity. I believe, reading the reports and all that, we are actually in a decadal kind of an opportunity in terms of drones and anti-drone systems, where we are seeing a lot of demand across armed forces worldwide. And Idea Falls has got a right to win based on the pedigree, lineage, and the vintage. But are we moving fast enough? For example, do we have capabilities in the hail and mail category and all that? So, can you put some more color on the defense capabilities that we are trying to... Start off, and which are the new segments, especially, and I'm talking more from the defense perspective, which are the new areas, opportunities that we are pursuing currently?

It's a great observation that, you know, we are at that inflection point that seems to be a very imminent and a very, you know, opportune moment for the industry in terms of how much we can do. We have purposefully presently stayed away from runway-dependent systems because we believe that there are certain... Challenges with respect to the nature of those systems, the quantities that can be procured, and overall developmental timeframe for those systems. If you look at most of the players in the ecosystem are able to get to the market with this particular class of systems with partnerships with somebody who has already done it presently, because building it grounds up will take longer. And therefore, you know, we won't enter that category for sure. Apart from that, capabilities that require operations from a backpack, from a rucksack, from a pickup truck or a container portable system. In these four broad categories, we continue to develop capabilities. And yes, I think given that. We own the subsystem layer as well. We are accelerating our deployment and development journey on many programs at this point in time. One of the capabilities, like we mentioned, is the capability around... Combat drones. We are working towards hybrid propulsion for some of our systems. And like we also mentioned, we are looking at one-way attack systems, as well as on the software side, we have multi-way operations, warming, and many other facets that we have the entire hardware infra built around. We have the work that is on in terms of evolving it towards more intelligent operation. So, edge compute, edge AI, there are many, many facets that we have built over the last few years, which we are now bringing together to deliver advanced capabilities to end customers.

Another second question would be that, since you have a lot of capabilities in terms of, what I mean is in-house capabilities in autopilot, payloads, GMS with denied navigation, software stack, and all that, are we looking at... Not only being an OEM, but also being a tier one supplier to some of the OEMs, which are maybe a lot of companies getting into the drone business, especially looking at the defense procurement and all that. So since you have this capability, and traditionally what we have seen is that most of the money is made by the tier one suppliers rather than the OEMs and platforms. So do you have any thoughts related to that?

So, one of the things that we're doing is that when we partner with certain, you know, collaborators of ours, we enable them by taking their airframes and populating them with our subsystems and building capability, which is a mix of that hardware capability and our entire avionics and GNSS denied and resilient navigation stack. So, those are the kind of things that we are presently working towards because it's more convenient to handle that when we look at it. Supplying a subsystem is an area that, again, is under exploration, but we haven't yet arrived at the final configuration that is explorable there. It takes a lot of effort actually to support other people in their development. So we are exploring what is the right way of doing it while we have to balance everything that we need to do for the opportunities today.

Thank you. Ladies and gentlemen, I request you to rejoin the queue for a follow-up question and to limit your questions to two per participant, as we have several participants in the queue. The next question is from the line of D.R. Jain from Sapphire Capital. Please go ahead. Hi, sir.

Thank you for the opportunity. So, how do we look at revenue and gross margins? For FY27 and for the coming years.

So, yeah, while we do not disclose or give forward-looking predictions on the numbers of top line, as we have also enumerated historically that for this year, our blended gross margin would likely hover between a 50-55% range. Subsequent years, as Ankit has enumerated, that right now the opportunity size is a shift. With all the past track requirements also coming in foray, as well as the Army Commander's Powers Enhancement is bringing in the sizable opportunities for our size of drones, and hopefully that will start to show up in the order book from Q1.

Okay, and in terms of CAPEX, how much are we targeting in the coming years?

Right now, we do not have a CAPEX plan other than our regular product developmental efforts that will continue in pushing the boundaries for our continued programs that are already there. But there's no plan on setting up any factory setup. For enhancing our capabilities, because right now, we're only using a single shift model, or we can enhance and go to both three shifts in the same space.

Okay, so thank you and all the best.

Thank you. The next question is in the line of Tateek Singh from Hilon's Capital. Please go ahead.

Yeah, thank you for the opportunity. Ankit, just to understand, what is the kind of opportunity in the non-order book space? You said your F527 pipeline of regular revenues and repeated orders is pretty strong. So, can you just give a sense or some ballpark numbers around that would be helpful?

So, Prateek, what you're saying is beyond the FTP and the revenue opportunities, you're saying? Yeah, correct.

Yeah, I won't be able to share. I just want to get more sense, like since your current order book is executable till 3QF527, so I'm just trying to understand how do you bridge that remaining? Three months of FY27. Is there any non-order book related revenues which usually flows through throughout the year? Yeah, yeah.

So we have our, one is our run rate business where on the civil side and the defense side also command level procurement happens. So that continues to happen through the year. So that those powers have been enhanced for the armed forces. So, that's something which is what we are, you know, excited about, and we should see that fructify in Q3, Q4 timeframe, outcomes of that, and in terms of other opportunities, there are some other opportunities as well that we are pursuing, which we can't necessarily speak about right now.

Got it. Fair enough. All the best.

Thank you. The next question is from the line of Shauri or Yadda from Growth Spear Ventures. Please go ahead.

Yeah. Am I audible? Yes, I am audible. Yeah. Thanks for the opportunity. I just want to know, like, there is some circulation of RSP regarding the 100 km and 50 km ISR drone. And the paid trial was supposed to happen in last July. Sorry, this July. So, have idea force performed in this technical trial called 100 kilometers?

Those are the opportunities that are under, you know, evaluation right now. Trials have not happened yet.

Okay. And for the 50 kilometers, any idea?

I don't think there was anything for 50 kilometers right now.

All over at RFI stage only. RFPs are only converted at 100 kilometers. Remaining RFPs are in progress at all.

Okay, sure. And for the U.S. retail market, given the, there was a strong presence of Skydio and DGI in U.S. market, so what white space is being targeted by IdeaForge, like where we can make a differentiation against the Skydio and DGI for U.S. market?

See, our specialization is around being able to operate in extreme cold environments and extreme hot environments. And secondly, we are one of the best assets globally for persistent surveillance operations. So these are the two areas that we focus on and customers appreciate our platforms due to the long flight time that we offer while being able to operate in these challenging environments.

And also high altitude capability.

I request you to rejoin the queue for a follow-up question. Ladies and gentlemen, please limit your questions to poor participant. The next question is on the line of Sarshan Jha from SB Capital. Please go ahead.

Am I audible?

Yes, sir.

So basically, sir, I am more interested in the markets where you can capture. Suppose the Indian government float a tender of 10,000 crores. So how much of it can come to you? Because there are many bigger players, defense players, like Adani is also going to, Tata is also going to, so how much market share he can drop here?

Shashank, in terms of market share, I think what remains to be seen is in what shape and form these opportunities come and whether there is a ready product that can be pitched or near ready product that can be pitched for these opportunities or not. Since some of those details are not yet frozen, I cannot suggest specifically a market share, but what I can say is that our attempt is to participate in maximum opportunities of whatever is going to come. We are geared up for the maximum participation at this point in time, and once the opportunities become real and come for bidding, we will be able to address what's possible from what is coming up from our segment.

And I suggest you have a follow-up question. So, what will the success rate be? Suppose you participate in 100% of the vendors, so how come a success rate you expect from there?

That, I think, is entirely dependent on the final requirements that the customers have for that particular product because competition is determined by the depth of the specifications that the customer asks. So, I'll probably be able to comment only on a case-by-case basis. Wherever the specifications are challenging, participation is usually low, and less products exist that can clear such challenges. Wherever the requirement is slightly more lenient, you end up... Having more competition. So, it will entirely depend on the color of what comes up.

So, it will be the case-by-case basis. And, Sushant, since the opportunities are distributed between ISR plus combat, some of the combat opportunities will also see how our partner readiness will be for those opportunities. So, it is not just the ISR readiness of IdeaForge, but also the combat readiness of some of our partners and related to specifications coming in these RFPs. We'll determine the success ratio on outcomes.

However, I just want to reiterate that our efforts to participate in maximum are at this point in time.

Thank you. Ladies and gentlemen, we take that as the last question due to the interest of time. And now, I would like to hand the conference over to the management for the closing comments.

Thank you, everyone, for your questions and for your continued engagement. I would want to reiterate that opportunity cycles, product mix, delivery schedules, supply disruptions, working capital requirements, and customer acceptance can vary our quarterly results. However, we are focused on managing these variables and building a strong and resilient business to create long-term value. Thank you once again for your support and confidence in IdeaForge.

On behalf of MUFG InTime, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.