Tonbo Imaging IPO Gets A Strong Start, But Does Growth Justify Its Valuation?

SUMMARY

• Tonbo Imaging’s ₹852.18 Cr IPO received strong early demand, amid rising investor interest in India’s defence tech sector
• The company’s thermal imaging, missile seeker and counter-drone technologies offer growth opportunities, but revenue and profit declined in FY26
• At a valuation of around ₹4,010 Cr, Tonbo must convert its order pipeline into sustained growth and stronger cash generation to justify investor expectations

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From the Iran war to rising geopolitical tensions across the globe, conflicts are driving demand for advanced defence technologies, from thermal imaging and missile guidance to systems that can counter drone swarms. Against this backdrop, Tonbo Imaging’s ₹852.18 Cr IPO offers investors a chance to bet on India’s growing defence tech sector.

Bengaluru-based defence tech company’s IPO remained in strong demand on the second day of bidding, garnering 6.29x subscription by 1:30 PM on October 16, according to BSE data, while its grey market premium (GMP) surged to as high as 71%.

The Bengaluru-based company has fixed its price band at ₹665-700 per share, valuing it at around ₹4,010 Cr at the upper end. The IPO closes on October 19.

The offer-for-sale-only issue comprises 1.22 Cr equity shares by existing shareholders. Investors can bid for a minimum of 21 shares, translating into an investment of ₹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 enters the market with a specialised portfolio of imaging and sensing systems used by defence forces and security agencies. Its products range from thermal imaging systems and weapon sights to missile seekers and high-power microwave systems designed to counter drone swarms. It claims to have deployed more than 28,000 systems across 24 countries, building a presence in both domestic and international defence markets.

However, its recent financial performance has been unimpressive. Revenue from operations fell 22.7% year-on-year (YoY) to ₹362.65 Cr in FY26, while net profit declined around 30% to ₹50.88 Cr. The company also reported a net loss of ₹17.74 Cr in Q1 FY27.

CEO Arvind Kondangi Lakshmikumar attributes the FY26 decline to delays in executing international programmes rather than a fundamental change in the business. He argued that defence technology companies need to be assessed over longer periods, given the nature of procurement and delivery cycles.

So, can Tonbo turn its tech advantage and order pipeline into sustained growth, while meeting the expectations built into its IPO valuation? But first…

A Sneak Peek Into Tonbo’s Tech

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

Tonbo’s technology focuses on reducing the size, weight and power consumption of thermal imaging systems, potentially allowing them to be deployed 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.

This, he added, creates opportunities to deploy the technology across smaller weapons, helmets and other military equipment. The CEO also sees considerable headroom in India’s thermal sights market as the armed forces expand their procurement of such systems.

“India has around 30,000 thermal sights, of which Tonbo has supplied approximately 20,000,” Lakshmikumar said. The company’s RHP, citing a Frost & Sullivan report commissioned by Tonbo, estimates that it 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.