Tonbo Imaging IPO Sees 6.29x Subscription as GMP Hits 71%

Bengaluru-based defence technology company Tonbo Imaging’s Rs 852.18 crore initial public offering (IPO) was subscribed 6.29 times by 1:30 PM on October 16, the second day of bidding, according to BSE data. The company’s grey market premium (GMP) also surged to as high as 71%.

Tonbo has set a price band of Rs 665 to Rs 700 per share, valuing the company at around Rs 4,010 crore at the upper end. The IPO will close on October 19.

The offer-for-sale-only issue comprises 1.22 crore equity shares sold by existing shareholders. Investors can bid for a minimum of 21 shares, translating into an investment of Rs 14,700 at the upper end of the price band. The company is expected to list on the BSE and NSE on October 23.

Founded in 2003, Tonbo develops specialised imaging and sensing systems for defence forces and security agencies. Its portfolio includes thermal imaging systems, weapon sights, missile seekers and high-power microwave systems designed to counter drone swarms.

The company claims to have deployed more than 28,000 systems across 24 countries, serving both domestic and international defence markets.

However, its recent financial performance has weakened. Revenue from operations fell 22.7% year-on-year (YoY) to Rs 362.65 crore in FY26, while net profit declined around 30% to Rs 50.88 crore. Tonbo also reported a net loss of Rs 17.74 crore in Q1 FY27.

CEO Arvind Kondangi Lakshmikumar attributed the FY26 decline to delays in executing international programmes rather than a fundamental change in the business. He said defence technology companies should be assessed over longer periods because of the nature of procurement and delivery cycles.

A Look at Tonbo Imaging’s Technology

Tonbo designs and develops electro-optical and infrared (EO/IR) systems, embedded electronics and imaging technologies. Its products help users detect, observe, identify and track objects in difficult visibility conditions.

The portfolio includes thermal imaging cores, handheld thermal binoculars, weapon sights, targeting systems, fire-control systems, missile seekers and missile-guidance systems.

The company focuses on reducing the size, weight and power consumption of thermal imaging systems, potentially allowing the technology to be used across a wider range of military applications.

“Thermal imaging has been around for 30-40 years. But it has always been heavy, expensive and consumed a lot of power, which limited the applications in which it could be used. What we have been able to do is build components that allow us to reduce the size, weight and power usage of thermal imagers,” Lakshmikumar said.

He added that these improvements could allow thermal imaging technology to be deployed across smaller weapons, helmets and other military equipment. He also sees room for growth in India’s thermal sights market as the armed forces expand procurement.

“India has around 30,000 thermal sights, of which Tonbo has supplied approximately 20,000,” Lakshmikumar said.

Tonbo’s red herring prospectus (RHP), citing a Frost & Sullivan report commissioned by the company, estimates that Tonbo accounted for 51% of thermal imaging units supplied to the Indian government between April 2024 and March 2026.

Beyond thermal imaging, Lakshmikumar identified missile seekers and high-power microwave technology as two other potential growth drivers.

Tonbo is working on a missile seeker programme with Bharat Dynamics Limited (BDL). According to the CEO, India has a significant requirement for missiles, and Tonbo is the sole-source supplier to BDL for an uncooled missile seeker.

The company is also developing high-power microwave technology designed to counter drone swarms. Lakshmikumar said Tonbo is among a small number of companies globally with the capability to take down drone swarms at ranges exceeding three kilometres.

He cited early customer interest, including a letter of intent from Europe and requirements from the Indian Navy. However, deliveries arising from these opportunities are expected only in FY29-FY30.

These programmes offer potential growth opportunities, but they are at different stages of development and procurement. Their contribution to revenue will depend on how quickly customer interest translates into firm orders and deliveries.

Business Model and International Presence

Tonbo’s business model differs from that of a conventional defence manufacturer. The company retains control over product design, engineering and intellectual property while outsourcing large-scale manufacturing to external vendors.

According to its RHP, Tonbo works with manufacturing partners including Kaynes and Avalon.

The company serves customers across more than 24 countries, with deployments spanning Armenia, Morocco, the UAE, Australia, Europe, the US and Israel.

Lakshmikumar said Tonbo approaches international markets with two objectives: using deployments in developed markets to demonstrate technological performance and entering emerging markets to establish that its products can be scaled at appropriate price points.

“We sell to customers such as the Mossad and the US Navy SEALs to show that the products can be technically superior,” he said.

Revenue Declines, but Order Book Provides Visibility

Tonbo’s financial performance remains an important consideration for investors. Revenue from operations increased from Rs 428.19 crore in FY24 to Rs 469.08 crore in FY25 before falling to Rs 362.65 crore in FY26.

Profit after tax (PAT) rose from Rs 68.54 crore in FY24 to Rs 72.76 crore in FY25 before declining to Rs 50.88 crore in FY26.

The company’s EBITDA fell to Rs 104.62 crore in FY26 from Rs 139.06 crore in FY25. However, its EBITDA margin remained relatively resilient at around 28.9%, compared with 29.6% in FY25.

Lakshmikumar said the revenue decline was primarily due to international programmes that could not be completed within FY26 and were consequently pushed into FY27.

“Defence businesses need to be looked at over a three-to-five-year window, and even more so for a defence technology products business,” he said.

The CEO cited a programme in Morocco that was expected to be delivered in March but was delayed because equipment required for the contract could not be shipped from the UAE amid the West Asia crisis.

He also pointed to an ongoing programme in Armenia, where Tonbo has delivered systems worth $55 million over the past three years. According to Lakshmikumar, the next phase was delayed because guns supplied by an Indian public sector company were held up, with the shipment route affected by the regional situation.

Despite the lower export contribution in FY26, Tonbo delivered gross margins above 51%, compared with the roughly 40% gross margin it typically forecasts for its domestic business. Lakshmikumar attributed this to the delivery of a different mix of higher-margin platform systems during the year.

Tonbo’s order book provides some visibility into future business. The company had an order book of Rs 314.24 crore as of June 30, 2026, comprising Rs 231.87 crore in domestic orders and Rs 82.37 crore in overseas orders.

It also received new orders worth Rs 118.15 crore between July and September, according to its RHP.

The June-end order book was equivalent to around 87% of FY26 revenue. While this does not guarantee near-term revenue, it provides a basis for tracking execution in the coming quarters.

Cash Flow and Working Capital

Cash generation and working capital remain important parts of Tonbo’s financial picture. The company reported negative operating cash flow of approximately Rs 136 crore in FY25 and Rs 63 crore in FY26, despite remaining profitable at the PAT level.

Inventory increased from Rs 219.49 crore at the end of March 2026 to Rs 319.63 crore at the end of June 2026. Short-term borrowings also rose from Rs 116.06 crore to Rs 129.72 crore over the same period.

These figures warrant attention as Tonbo prepares to execute delayed and new programmes.

Lakshmikumar, however, argued that reported working-capital days do not fully reflect the company’s underlying operating cycle because revenue is heavily concentrated in the second half of the financial year.

Tonbo Imaging’s IPO Valuation

Tonbo’s IPO offers exposure to a specialised defence technology business with proprietary products, international deployments and potential growth opportunities across thermal imaging, missile seekers and counter-drone systems.

Its position in select thermal imaging categories and relationships with domestic and international customers provide a base for pursuing further programmes. The broader opportunity lies in the growing importance of indigenous defence technology and advanced sensing systems.

Lakshmikumar said investors should assess the company based on its proven technology and its ability to sell to demanding international customers.

At the upper end of the price band, Tonbo is valued at around Rs 4,010 crore, or nearly 79 times its FY26 PAT.

The grey market premium of around 71% indicates strong investor interest, with market participants looking beyond the recent earnings decline and focusing on the company’s longer-term prospects.

For investors, key indicators to track include the execution of delayed international programmes, the conversion of new orders into revenue, the contribution of higher-value products and improvements in cash generation.

Tonbo’s future performance will depend on its ability to convert its technology capabilities and order pipeline into consistent financial results.

FAQs

1. What is the price band for Tonbo Imaging’s IPO?

Tonbo Imaging has set a price band of Rs 665 to Rs 700 per share.

2. When does Tonbo Imaging’s IPO close?

The IPO closes on October 19, and the company is expected to list on the BSE and NSE on October 23.

3. What does Tonbo Imaging manufacture?

Tonbo develops electro-optical and infrared systems, thermal imaging products, weapon sights, missile seekers, missile-guidance systems and high-power microwave systems designed to counter drone swarms.

4. What was Tonbo Imaging’s revenue in FY26?

Revenue from operations fell 22.7% year-on-year to Rs 362.65 crore in FY26, while net profit declined around 30% to Rs 50.88 crore.

5. What was Tonbo Imaging’s order book as of June 30, 2026?

The company had an order book of Rs 314.24 crore, comprising Rs 231.87 crore in domestic orders and Rs 82.37 crore in overseas orders.

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