20% Lower Circuit: Drone stock crashes after SEBI bans promoters and advisors from the market

Synopsis:
Droneacharya Aerial Innovations hit the lower circuit after SEBI barred its promoters and several other advisors from the securities market, stating the misuse of IPO funds, wrong revenue recognition and many more violations.

The shares of this leading business engaged in Drone operation training, supply & maintenance services, and management consultancy & training services are in focus after SEBI took action against its promoters, citing misuse of IPO proceeds and more. In this article, we will dive deeper into the details.

With a market capitalisation of Rs 109 crore, the shares of Droneacharya Aerial Innovations Ltd reached a day low of Rs 45.38 per share (lower circuit), down by 20 percent from its previous day’s closing price of Rs 56.72 per share. In the last one year, the stock has corrected by over 60 percent, underperforming NIFTY 50’s positive return of 8 percent.

About the Fraud

SEBI has fined DroneAcharya, its promoters, Prateek and Nikita Srivastava, and their advisors a total of Rs 75 lakh. It has also banned them from the securities market for up to two years. The regulator states there was a systematic attempt to mislead investors and has frozen the company’s assets during the investigation. DroneAcharya and its key personnel can no longer buy or sell shares without SEBI’s permission.

According to SEBI, nearly 35 percent of DroneAcharya’s FY24 revenue, about Rs 12.35 crore, came from fake or non-existent sales linked to two entities, Triconix and IRed. No actual goods or services were delivered. Many customer addresses were found to be residential homes or unrelated shops. Without these inflated numbers, the company would have reported a loss of Rs 3.91 crore instead of a profit of Rs 8.44 crore, misleading investors about its financial health.

The investigation also uncovered serious misuse of IPO funds. DroneAcharya raised Rs 33.96 crore in its IPO, with Rs 27.99 crore designated for purchasing drones and accessories. SEBI reports that only Rs 70 lakh was spent on drones, while the remaining Rs 27.28 crore was diverted into fixed deposits and various accounts without proper disclosure. There were also undisclosed transactions with Awyam Synergies Pvt Ltd, which received Rs 10.8 crore and returned Rs 8.16 crore, none of which was reported by the company.

SEBI highlighted further concerns in DroneAcharya’s pre-IPO fundraising. The company raised Rs 32.35 crore from about 200 investors through optionally convertible preference shares (OCPS). SEBI believes many investors were promised quick listings and high returns. These OCPS were converted into equity shares before the IPO, allowing early investors to bag substantial profits. 

Of the 201 pre-IPO investors, 168 sold their shares and earned a total of Rs 89.6 crore, averaging a return of 225 percent. One notable case was the daughter of advisor Sandeep Ghate, who reportedly made Rs 6.1 crore, a staggering 5,800 percent return.

After the listing, the company and its advisors allegedly continued to mislead investors with exaggerated or trivial corporate announcements to create hype around the stock. SEBI claims these announcements, along with inflated revenue figures, aimed to attract more public investors.

The regulator also took action against several intermediaries. Instafin Financial Advisors and its partner Sandeep Ghate allegedly played a key role in promoting the misleading investment pitch. The company’s auditor issued clean reports despite clear issues in revenue recognition and fund misuse. The merchant banker failed to flag related-party transactions, and the compliance officers submitted incorrect shareholding patterns while not disclosing deviations in the use of IPO proceeds.

Now, SEBI has demanded explanations from all parties involved, requiring them to justify why stronger penalties, refunds, and long-term market bans should not be imposed. Until the investigation is complete, the company and the individuals involved cannot dispose of assets. SEBI is ensuring tight control to prevent any further movement of funds and to protect investors.

Financial and Other Highlights

Droneacharya reported a revenue of Rs 9.58 crore in H1 FY26, a decline of 64 percent as compared to Rs 26.9 crore in H1 FY25. However, it grew by 26 per cent from Rs 7.62 crore in the second half of FY25.

Regarding its profitability, it reported a net profit of Rs 1.94 crore in H1 FY26, a growth of 28 percent as compared to Rs 1.51 crore in H1 FY25. However, it reported a loss of Rs 15 crore in the second half of FY25.

DroneAcharya Aerial Innovations is a 2017-born next-gen tech and data science company focused on the tech domains of defence, space, drones, and IT. The company takes pride in its talent pool, which comprises veterans of the Indian Army, ISRO, and DroneTech majors worldwide, whose combined expertise is the main source of the innovative breakthrough and the state-of-the-art technology development.

Written by Satyajeet Mukherjee

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