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How to Invest in Drone Stocks

What's the first thing that comes to your mind when I say the word 'drones'?

Is it war? Or is it essential delivery?

In the modern and rapidly evolving world we live in, the various use cases of drones have spread out to far more than just delivering essentials or operating in warfare.

Drones have become much more commonplace than they were in preceding centuries. Today, they have entered the consumer market and have become associated with more than just the idea of war.

Various companies are changing their stance and adopting drone technology.

Take the mining sector, for instance. These companies are spending heavily to equip themselves with drones for regular business operations.

Then there's oil exploration companies which use drones to monitor pipelines for safe operations.

There's agriculture companies making large investments to promote the use of drone technology in the agriculture sector to boost crop production.

Food delivery companies have already tested deliveries via drones.

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 were just a few examples. There are many other Indian companies in the exploding drone market.

In India, big corporates like the Adani group and Reliance are competing in the civilian drone space.

Defence companies are competing hand in hand to procure drone orders from the Indian Navy and also exploring options for exports.

Not just that. Several other Indian companies have entered the evolving drone market by acquiring stake in drone startups.

For instance, Infosys has a stake in drone startup IdeaForge. Info Edge has invested in a drone startup named SkyLark Drones.

Then there are companies which are partnering with drone manufacturers. DCM Shriram Industries has formed a joint venture (JV) with a Turkish drone manufacturer.

As you can see, there are multiple ways one can invest in drone stocks in India. An investor can play the drone theme by:

  • Investing in defence companies manufacturing drones.
  • Investing in companies partnering with drone startups for defence or commercial drone orders.
  • Investing in companies having any exposure to drone electronics.
  • Investing in logistics companies venturing into drone deliveries.

Right now, drones are utilized more in the military. Their unmanned flight capabilities are something most military services look for. So naturally, these drones are in high demand.

Investing in defence companies manufacturing drones can prove lucrative.

Likewise, recreational drones are also becoming more popular as we speak. Soon, they'll be as popular as the military and industrial ones.

Content creators use drones for vlogging, creative videos, university projects, research, etc.

A smart investor will also explore the opportunity of investing in stocks which are making recreational drones.

But you need to make sure these companies are generating consistent revenues.

Remember, the drone industry is a diverse market. There are different companies targeting different niches within the market.

So check which drone companies are generating steady and growing revenues from the drone segment for the past few years. Check their latest financial updates to see if their future prospect is still promising.

Developments are happening at a rapid pace in this space. It's safe to say that in the near future, drones will continue to be an integral part of life in some or the other way.

But here's the big question mark. The Indian drone industry is still at a nascent stage so it raises question whether the industry will live up to its hype. We believe it will.

The nascent drone industry in India has a wide scope and looks quite promising. We're not far away from when India becomes a global drone hub.

Here's an example that will back our statements...

India currently relies on imports when it comes to defence. A couple of years ago, Turkey too relied on defence imports. But in 2016, Turkey stopped relying on allies and started developing its own base. Manufacturing military drones became a top priority for Turkey.

What followed after a few years? Today, Turkey has developed an impressive local drone industry from the ground up. Armed Turkish-built drones have proven themselves in combat operations in Syria, Iraq, and as far afield as Libya. Turkish companies are developing a variety of lethal armed drones.

Keeping this in mind, remember that a lot is happening in the defence sector in India. After Russia invaded Ukraine, it became of utmost importance for the Indian defence sector to buckle up.

All the above factors clearly indicate that the drone sector in India is set to grow rapidly over the next few years.

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...

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