Which Adani Company Manufactures Drones and Defence Products?

The defence and the drone sectors have been few of the hottest performers in Indian markets over the past year, grabbing the attention of investors and market watchers alike.

And it's not just the seasoned players diving in-three passive funds have recently thrown their hats into the ring, signalling massive interest in this fledgling industry.

With geopolitical tensions heating up in the Middle East, especially the escalating conflict between Iran and Israel, there's growing concern that a full-blown regional crisis could be on the horizon, potentially shaking up the global economy in a big way.

Amid all this, one name that's been making serious waves in these industries is the Adani Group.

Known for its bold moves across industries, the Adani Group has swiftly positioned itself as a rising powerhouse in the defence and drone manufacturing sector.

With ambitious plans and cutting-edge technology, the group is gearing up to play a pivotal role in this booming industry.

In this article, we'll dive into how Adani Group companies are making their mark in the defence and drone manufacturing arena.

#1 Adani Enterprises

Adani Enterprises Ltd (AEL) is the flagship company of the Adani Group, one of India's largest and most diversified conglomerates with interests spanning airports, data centres, agro-products, edible oils, foods, and, notably, the defence and aerospace sectors.

As an incubator for new ventures, AEL has successfully fostered key subsidiaries, with Adani Defence and Aerospace emerging as a significant force in India's growing defence and drone manufacturing industries.

• Defence Manufacturing Prowess

  Adani Defence and Aerospace plays a crucial role in India's push toward self-reliance in defence. Its diverse product range includes fighter aircraft, helicopters, unmanned aerial systems (UAS), missiles, small arms, and artillery systems.

  A key highlight of its strategy is a partnership with the UAE-based EDGE Group, a global leader in defence technology.

  This collaboration aims to create advanced products such as loitering munitions, counter-drone systems, and electronic warfare solutions to cater to both domestic and international markets. The two firms are particularly focused on expanding into the Middle East, Southeast Asia, and Africa, helping to bolster India's defence exports.

  On the domestic front, Adani has heavily invested in building critical defence infrastructure. Its Rs 30 billion (bn) Kanpur ammunition factory, South Asia's largest ammunition and missile manufacturing complex, plays a vital role in supplying the Indian defence forces. Furthermore, Adani is setting up counter-drone and missile production facilities in Telangana with an investment of Rs 10 bn.

  These projects not only enhance India's defence capabilities but also align with the country's "Aatmanirbhar Bharat" initiative, aimed at reducing dependence on foreign defence imports.

• Strategic Defence Collaborations

  In a key move to bolster local defence production, Adani Defence & Aerospace has entered into a partnership with Thales Group to locally manufacture 70mm rockets.

  This collaboration supports the Indian government's "Make in India" initiative, aiming to increase self-reliance in defence production. These rockets will be used by the HAL Rudra and Prachand helicopters, both critical assets in India's military operations.

  The HAL Rudra, a weaponized version of the Dhruv Advanced Light Helicopter, is equipped with missiles, rockets, and cannons, while the HAL Prachand, known for its high-altitude warfare capabilities, also relies on advanced weapons systems.

  The local production of these rockets ensures a steady supply, enhancing the operational readiness of India's armed forces.

• Advances in Drone Technology

  Adani Defence and Aerospace is also at the forefront of drone technology in India, with a focus on innovation and indigenous production. Its Drishti 10 Starliner Unmanned Aerial Vehicle (UAV) is a notable example of its technological advancements.

  This cutting-edge intelligence, surveillance, and reconnaissance (ISR) platform boasts 36-hour endurance and a payload capacity of 450 kg, making it the only all-weather military platform in India certified under STANAG 4671. This certification allows it to operate in both segregated and unsegregated airspace, a significant advantage in military operations.

  Adani's involvement in drone technology goes beyond current production capabilities. The company is in the process of acquiring advanced drone technology firms in Bengaluru and Hyderabad to enhance its unmanned systems portfolio.

  These acquisitions are expected to be finalized in the coming months and will play a crucial role in Adani's expansion into remote reconnaissance and counter-drone operations, particularly in hostile environments.

• A Look at Financials

  For FY24 its revenue dropped by 24% to Rs 964.2 billion (bn), down from Rs 1,275.4 bn. The company's total income decreased by 23.6% at Rs 982.8 bn in FY24, compared to Rs 1,287.3 bn reported in FY23.

  Meanwhile the net profit rose by 31% to Rs 32.9 bn.

  Adani Enterprises Financial Snapshot (FY20-24)

  (Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
  Revenue	434,026.00	395,371.00	694,202.00	1,275,395.00	964,210.00
  Revenue Growth (%)	7.5	(-8.9)	75.6	83.7	(-24.4)
  Net Profit	7,980.00	7,463.00	4,754.00	22,000.00	32,934.00
  Net Profit Margin (%)	1.8	1.9	0.7	1.7	3.4
  Return on Equity (%)	4.7	4.3	2.2	6.7	9
  Return on Capital Employed (%)	13.2	9.2	8.1	11	11.4

  Data Source: Equitymaster
  

  From FY20-24 its revenue and net profit has compounded at a compound annual growth rate (CAGR) of 19% and 64% respectively.

  It has been delivering strong return, with the RoE and RoCE averaging at a healthy 5.4% and 10.6%, respectively.

  Over the past five years, the company has accumulated significant debt due to substantial investments in numerous new growth sectors, including airports, cement, copper refining, green hydrogen, petrochemical refining, roads, and solar cell manufacturing.

  However, the company is continuously working to reduce its debt.

  Through its strategic investments in defence manufacturing and drone technology, Adani Enterprises is positioning itself as a key player in India's evolving defence landscape.

  Its partnerships, acquisitions, and focus on indigenous production underscore the company's commitment to driving innovation and self-reliance in the sector.

#2 Adani Ports and Special Economic Zone

Adani Ports and Special Economic Zone (APSEZ), India's largest private-sector port developer and operator, is increasingly playing a crucial role in bolstering the country's defence sector.

With a network of 15 ports and terminals across India, as well as ownership of the strategically important Haifa Port in Israel, APSEZ is expanding its footprint into defence manufacturing and logistics, contributing to India's mission of becoming a defence exporter.

• Defence Manufacturing Initiatives

  APSEZ is actively involved in India's defence manufacturing ambitions through its investment in a state-of-the-art propellant production facility in Shivpuri, Madhya Pradesh.

  This facility, part of a Rs 35 bn investment, aligns with the government's Aatmanirbhar Bharat initiative, which seeks to reduce dependency on defence imports and transform India into a leading global exporter of defence equipment.

  The propellant plant will enhance India's capability in missile and ammunition production, providing vital components for the country's defence forces.

  Additionally, APSEZ has made significant strides in small arms manufacturing. The company is investing in a small arms plant in Madhya Pradesh, further contributing to India's self-reliance in defence production.

  These initiatives are strategically designed to support the Indian Armed Forces and expand India's defence manufacturing base, reinforcing the country's ability to produce critical defence equipment domestically.

• A Look at Financials

  For FY24, Adani Ports reported a 28% YoY rise in revenue at Rs 267.1 bn from Rs 208.5 bn a year back. Meanwhile the net profit rose 70% to Rs 80.7 bn, up from Rs 47.5 bn a year back

  Adani Port's Financial Snapshot (FY20-24)

  (Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
  Revenue	114,388.00	125,496.00	171,188.00	208,519.00	267,106.00
  Revenue Growth (%)	4.7	9.7	36.4	21.8	28.1
  Net Profit	37,845.00	50,487.00	49,532.00	53,909.00	81,040.00
  Net Profit Margin (%)	33.1	40.2	28.9	25.9	30.3
  Return on Equity (%)	14.8	16.5	12.9	11.8	15.3
  Return on Capital Employed (%)	12	13.5	10.6	10.8	14.3

  Data Source: Equitymaster
  

  From FY20- 24 its revenue and net profit has compounded at a compound annual growth rate (CAGR) of 19.6% and 14.9% respectively.

  It has been delivering strong return, with the RoE and RoCE averaging at a healthy 14.3% and 12.2%, respectively.

Conclusion

India has set an ambitious defence export target of Rs 350 bn by 2024-25, focusing on the indigenisation of weapons and military systems.

Key initiatives supporting this vision include phased bans on weapon imports, dedicated budgets for locally manufactured defence equipment, an increase in foreign direct investment (FDI) from 49% to 74%, and improvements in the ease of doing business.

These efforts have accelerated the domestic defence industry's growth, positioning India as a significant player on the global stage.

In a major push, the Defence Acquisition Council (DAC) recently approved proposals worth Rs 1.4 tn to enhance the operational capabilities of the Indian Armed Forces. Most of these procurements will be sourced from Indian companies, further strengthening domestic players like Adani Defence and Aerospace.

The Indian drone industry is also expanding rapidly, with the government aiming to establish India as a global hub for drone manufacturing and services. This sector is expected to offer significant investment opportunities, particularly as the central government launches initiatives like providing drones to rural women for agricultural use.

Over the next three years, 15,000 drones will be distributed to women's self-help groups (SHGs), along with training to operate them, enhancing rural agricultural productivity.

These developments highlight a promising future for the Adani Group's defence and aerospace businesses, as the growing focus on indigenous production and cutting-edge technologies creates strong opportunities for growth in the coming years.

Nevertheless, it is always prudent to conduct thorough research before making any investment decisions. Ensure investment aligns with your financial objectives and matches your risk tolerance level.

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