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Best Drone Stocks For January 2025: Zen Technologies, Rattan India, HAL and More-Based on 5Y CAGR

Updated on: Dec 27, 2024, 4:51 PM IST
Drones are transforming industries such as agriculture, logistics, defence, and entertainment, creating new growth opportunities.
Best Drone Stocks For January 2025: Zen Technologies, Rattan India, HAL and More-Based on 5Y CAGR
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Drone stocks represent shares in companies engaged in the development, production, and operation of drone technologies. These companies cater to various sectors, including defence, agriculture, logistics, and surveillance. Investing in drone stocks offers exposure to the rising global demand for unmanned aerial vehicles (UAVs) across industries. Drones are transforming industries such as agriculture, logistics, defence, and entertainment, creating new growth opportunities. In this blog, we will look at the best drone stocks in India for January 2025.

Drone Industry in India: A Quick Overview

The Indian drone industry is expected to reach ₹120-150 billion (USD 1.5-1.9 billion) by 2026. Currently, drones are mainly utilized in the infrastructure and agriculture sectors. However, the industry’s growth is being fueled by a broader range of applications, favourable government policies, and an increasing number of startups exploring new drone use cases.

Recently, India and the United States signed a US$ 3.81 billion (Rs. 32,000 crore) agreement to acquire 31 Predator drones and establish a Maintenance, Repair, and Overhaul (MRO) facility in India. This deal, which could potentially grow to US$ 4.11 billion (Rs. 34,500 crore), aims to boost the Indian armed forces’ surveillance capabilities. The MQ-9B drones will be distributed among the Army, Navy, and Air Force, with 15 assigned to the Navy and 16 split equally between the Army and Air Force.

Best Drone Stock Based on 5Y CAGR

Company Name Market Cap (In ₹ Crore) 5Y CAGR (%)
Zen Technologies Ltd 22,147.94 114.48
Rattanindia Enterprises Ltd 8,787.09 101.79
Hindustan Aeronautics Ltd 2,82,838.32 63.49
Bharat Electronics Ltd 2,15,784.67 55.04
Honeywell Automation India Ltd 37,336.20 9.74

Note: The stocks have been sorted based on 5Y CAGR and as of December 27, 2024

Overview of Best Drone Stocks 

Zen Technologies Limited

Zen Technologies designs develops and manufactures combat training solutions and Counter-drone solutions for defence and security forces. The company has signed its partnership with Applied Visual Technology Inc. D.B.A AVT Simulation through a Memorandum of Understanding (MoU). Zen Technologies is focused on increasing the sales of Equipment and expanding the product portfolio with a strong focus on emerging space AntiDrone systems.

Key metrics: 

  • Return on equity (ROE): 33%
  • Return on Capital Employed (ROCE): 46%

RattanIndia Enterprises Limited

RattanIndia Enterprises Limited is engaged in the new age businesses including e-commerce, electric vehicles, and drones. NeoSky’s vision is to offer comprehensive 360-degree drone solutions to customers, encompassing Drone as a Product (DAAP – drone hardware), Drone as a Service (DAAS – drone service solutions), and Software as a Service (SAAS – drone software).

Key metrics: 

  • ROE: -10.4%
  • ROCE: 2.89%

Hindustan Aeronautics Limited

Hindustan Aeronautics is engaged in the business of manufacturing Aircraft and Helicopters and Repair, Maintenance of Aircraft and Helicopters. The company recently secured a contract for the supply of 12 Su-30 MKI aircraft along with associated equipment with a value of ₹13,500 Crore.

Key metrics: 

  • ROE: 28.9%
  • ROCE: 38.9%

Bharat Electronics Ltd

Bharat Electronics Ltd (BEL) is a major producer of advanced electronic systems for the Indian Navy, Air Force, and Army. BEL has secured additional orders worth ₹973 crore with major orders including platform screen doors for metro rail, radars, communication equipment, jammers, seekers, upgraded submarine sonar, upgraded satcom terminals, test stations, spares, services etc.

Key metrics: 

  • ROE: 26.3%
  • ROCE: 34.6%

Honeywell Automation India Ltd

Honeywell Automation India Ltd (HAIL) is a top provider of automation and software solutions that boost productivity, safety, security, and comfort in both homes and businesses. The company reported a 5.57% decline in net profit to ₹115.10 crore while a decline of 7.27% in revenue to ₹1,023.9 crore in Q2 FY25 over Q2 FY24.

Key metrics: 

  • ROE: 14.8%
  • ROCE: 19.8%

Factors to Consider Before Investing in Drone Stocks in India

Investing in drone sector stocks can be a lucrative opportunity, but it’s essential to evaluate several factors before committing your capital. Here are key considerations:

Market Growth Potential

Assess the growth trajectory of the Indian drone industry. With sectors like agriculture, defence, logistics, and infrastructure adopting drone technologies, understanding the market demand and expansion opportunities is crucial.

Government Regulations

The Indian government has introduced various regulations for drone operations. Consider how these policies could impact the market, including any future legislation or support programs for the drone industry.

Technology and Innovation

The pace of innovation in drone technology plays a significant role in shaping the market. Evaluate how companies are investing in R&D and adopting cutting-edge technologies such as AI, machine learning, and autonomous flying.

Should You Invest in Drone Stocks?

The drone industry is experiencing rapid growth, with drones becoming an increasingly essential part of sectors like agriculture, logistics, defence, and entertainment. This growth presents significant opportunities for companies to capture market share and boost revenue. However, despite the promising outlook, several challenges could affect the industry’s future.

The sector also faces intense competition from both established companies and emerging startups. To stay competitive, businesses must continually innovate, which demands substantial investment in research and development. Additionally, the public and business acceptance of drones is still mixed, with concerns about privacy, safety, and ethical issues slowing widespread adoption. Therefore, careful consideration is necessary before investing in drone stocks.

Conclusion

While the drone industry offers significant potential, investors should proceed with caution. Conducting thorough research on regulatory trends, technological advancements, and competitive dynamics is essential before making investment decisions.

 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in securities market are subject to market risks, read all the related documents carefully before investing.

Published on: Dec 27, 2024, 3:01 PM IST

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