Drones Start to Deliver on the Huge Opportunity. Here's the Latest on Drones...

When drones first emerged on the market, they were strictly used for military purposes.

But it's high time now that we accept the fact that drones are making a stellar contribution across different industries and not just defence.

'Uttarakhand becomes first Indian state to roll out drones in healthcare', read the title of a leading financial daily.

'Himachal Pradesh approves drone policy to create holistic ecosystem and boost employment', read another.

'Swiggy starts deliveries via drones as norms relax', up popped another notification on my phone the other day.

As you can see, the war zone is not the only place where drones play a pivotal role.

Last month, a small diagnostics company Redcliffe Labs started operating commercial drones for delivering medicines. The company's founder was quoted saying,

• Uttarkashi to Dehradun by road is 144 km, 6-8 hours by road and 12 hours during a landslide.
  
  But using drone technology this distance was covered in 88 minutes with one battery swap in between.

Listed healthcare company Aster DM Healthcare has entered into a partnership with Skye Air Mobility, a drone-based logistics firm, for the delivery of diagnostic samples and medicines.

Then there's Swiggy which has partnered with multiple companies for deploying drones to deliver groceries and essential items in select cities.

Developments are happening at a rapid pace and private companies are keen to foray into this technology.

Private players eye a slice of the pie

Of course, new private players were waiting on the sidelines to foray into the booming drone sector in India.

It was just a matter of when.

The most recent entry into drone space (civilian drones) is by none other than billionaire Gautam Adani's Adani group.

The Adani group's flagship firm Adani Enterprises' subsidiary Adani Defence Systems and Technologies recently acquired a 50% stake in drone startup General Aeronautics.

This is not the first time Adani Defence has taken exposure to drones. In 2018, Adani Defence along with an Israeli firm, in a joint venture (JV), opened up an advanced drone manufacturing unit in Hyderabad.

While there are no latest developments on the same, reports suggest that the Hyderabad facility is being expanded to cater to growing orders for drones.

Back in 2018 when the group took exposure to drones, it focused on defence drones. But now, the company has exposure to civilian drones too.

Apart from drones, the Adani group has also invested in five high growth sectors.

Competing hand in hand with the Gujarat based industrialist, Mukesh Ambani's Reliance Industries has invested in Asteria Aerospace, a Bengaluru-based company that specialises in drone software and technology.

Asteria Aerospace has the added benefit of developing the software along with manufacturing drones.

Other private players include RattanIndia Enterprises, Zen Technologies, Zomato, Paras Defence & Space Tech, DCM Shriram Industries, Infosys and Info Edge (India).

RattanIndia Enterprises (through NeoSky India), Infosys (through ideaForge), Info Edge (through Skylark Drones), Zomato and DCM Shriram Industries (through Zyrone Dynamics) have taken exposure to the drone space via investing in startups.

While Zen Technologies and Paras Defence are pure drone manufacturers or defence equipment providers, which makes them direct beneficiaries.

The evolution of drones and the road ahead...

Today, drones are used in various industries...for delivering small items to conducting inspection, to monitoring crops, you name it, and drones can take up the task.

This was not always the case though. A couple of years ago, when people heard the word 'drones', they envisioned only the military uses.

The use cases today seem endless as more and more industries discover ways that drones benefit their business.

The companies involved in mining sector are spending heavily to equip themselves with drones for regular business operations.

Oil exploration companies plan to use drones to monitor pipelines for safe operations.

Agriculture companies are making large investments to promote the use of drone technology in the agriculture sector to boost crop production.

Logistics companies can't rule out drones as they help deliver essentials including vaccines from one place to another in a short span.

Drones also help telecom companies maintain telecom towers and survey potential new tower locations.

These are just a few examples. Other industries have also deployed drones.

All this would not have been possible without the government's renowned support for the industry.

First, the government laid down the drone rules 2021, which aimed at giving the drone industry a much needed boost.

Then the centre announced the production-linked incentive (PLI) scheme for making drones. The PLI scheme for drones and drone components is allocated Rs 1.2 bn, spread over three financial years.

Following this, the government banned import of drones to promote domestic manufacturing in India.

Slowly and steadily, the government gave the drone industry wings to fly.

We for one believe that the future of drones is particularly bright due to the government's promise.

But what do you think dear reader? Do drones have a bright future as they creep their way into more industries and companies discover more value-added use cases?

Or do you think the industry might come under scrutiny, just like how the electric vehicles (EV) industry is facing fire incidents and defects in EV batteries?

Share your views in the comment section below.

Meanwhile, also check out the below video where Co-head of Research at Equitymaster Tanushree Banerjee talks about drone upside in underrated defence stocks.

In the video, Tanushree talks how India can benefit now that a host of countries have stopped relying on the US, UK and Russia for arms imports, especially drones.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...