Investors' enthusiasm for India's defence sector was on full display on Friday, October 23, as Tonbo Imaging, a Bengaluru-based maker of military imaging and targeting systems, surged on its stock market debut.
Tonbo's shares listed at ₹1,162 on the BSE, a 66% premium to the IPO price of ₹700, and at ₹1,160 on the National Stock Exchange, Inc42 reported. The stock touched an intraday high of ₹1,211 on the NSE, 73% above the issue price, before easing to close at ₹1,133.80, still about 62% higher than the IPO price.
At the BSE close, Tonbo's market capitalisation stood at about ₹6,494 crore, or roughly $684 million.
A heavily oversubscribed offer
The ₹852 crore IPO, which ran from October 15 to 19, was subscribed 135.9 times overall, with bids covering 115.87 crore shares against 85.26 lakh on offer. Qualified institutional buyers led demand.
Ahead of the issue, Tonbo raised ₹255.4 crore from 43 anchor investors at ₹700 per share, including SBI Mutual Fund, Goldman Sachs, BlackRock and WhiteOak Capital.
The IPO was entirely an offer for sale of about 1.22 crore shares by existing shareholders, meaning Tonbo itself received no proceeds. The price band was ₹665 to ₹700 per share.
What Tonbo makes
Tonbo Imaging designs advanced imaging and sensor systems for military use. Its products include thermal imaging systems, weapon sights, fire-control systems and missile seekers, used for surveillance, reconnaissance and targeting.
The company was originally part of Sarnoff Corporation, a US research company. Co-founders Arvind Lakshmikumar, its chief executive, Ankit Kumar and Cecilia D'Souza bought the Indian operation out of Sarnoff in 2012. It has since shifted from research and technology development services to building its own products.
Tonbo carries out prototype development, system integration and qualification testing in-house, and outsources manufacturing to Indian electronics manufacturers Kaynes Technology and Avalon Technology.
Founders cash in
The three co-founders together sold shares worth ₹137.2 crore in the IPO, with Lakshmikumar accounting for ₹80.5 crore, according to Inc42.
Financial performance
Tonbo's recent financial performance has been uneven. Operating revenue fell 22.7% to ₹362.6 crore in fiscal 2026 from ₹469.1 crore a year earlier, and net profit fell about 30% to ₹50.8 crore. In the April-June quarter of fiscal 2027, the company reported a net loss of ₹17.7 crore on revenue of ₹36 crore.
The chief executive attributed the fiscal 2026 revenue decline to delays in international programmes, which pushed deliveries into fiscal 2027. Defence contracts are often lumpy, with revenue depending on the timing of large orders and deliveries.
Why investors love defence
Despite the uneven numbers, investors were willing to pay a significant premium for Tonbo's shares. Indian defence stocks have been among the best-performing sectors in recent years, driven by government policies to boost domestic defence production and exports.
India has set targets to increase domestic defence manufacturing and reduce its dependence on imports, which have historically made it one of the world's largest arms importers. Policies include lists of items that must be procured domestically, increased budgets for domestic procurement and support for private sector participation. Defence exports have also risen sharply.
Geopolitical tensions, including conflicts in Ukraine and the Middle East and India's own border tensions, have increased the focus on defence preparedness. On the same day as Tonbo's listing, India's foreign ministry said Chinese troops periodically disturb the situation along the Line of Actual Control.
The defence-tech startup boom
Tonbo is part of a growing cohort of Indian defence technology startups, building drones, sensors, communications systems, electronic warfare equipment and space-based capabilities. Venture capital investment in the sector has increased, and several companies have attracted interest from both domestic and international investors.
Successful listings such as Tonbo's could encourage more defence-tech startups to consider public markets, providing exits for investors and capital for growth.
A contrast with other listings
Tonbo's strong debut contrasted with Zetwerk's modest 5.5% premium on the same day, and with a broader market sell-off that saw midcap and smallcap indices suffer their worst week in 20 months. The difference highlights how investors are discriminating between sectors, favouring areas with strong policy tailwinds and profitability.
Valuation questions
At its listing price, Tonbo trades at a high multiple of its fiscal 2026 earnings, reflecting expectations of strong growth as delayed international programmes are delivered and domestic orders increase. Analysts will watch whether the company can convert its order pipeline into revenue and return to growth in the coming quarters.
India's defence export push
India's defence exports have grown rapidly, reaching record levels in recent years as the government has encouraged private companies and state-owned firms to sell abroad. Indian companies now export products ranging from artillery shells and armoured vehicles to radars, electronic systems and components to dozens of countries. The government has set ambitious targets for further growth.
Thermal imaging and targeting systems are in high demand globally, as militaries modernise and conflicts highlight the importance of night-vision and surveillance capabilities. Tonbo's experience with international programmes positions it to benefit from this demand, although export sales depend on government approvals and can be subject to delays, as the company's recent revenue decline shows.
The listed defence universe
Tonbo joins a growing group of listed Indian defence companies, which includes state-owned firms such as Hindustan Aeronautics, Bharat Electronics, Bharat Dynamics and Mazagon Dock Shipbuilders, as well as private players such as Data Patterns, Paras Defence and Space Technologies, and Zen Technologies. Many of these stocks have delivered strong returns over the past few years, although valuations have become stretched at times, leading to sharp corrections.
Investors will compare Tonbo's valuation with these peers, weighing its technology and growth potential against its smaller scale and recent earnings volatility.
What comes next
Tonbo's performance in the coming quarters will be key to sustaining investor confidence. Revenue recovery from delayed international programmes, new domestic orders and margin trends will be closely watched.
For India's defence ecosystem, Tonbo's listing is another sign that private companies are becoming central to the country's ambitions to build a self-reliant defence industry and become a significant exporter of military technology. The company's ability to deliver on international programmes and win new domestic contracts will be the key drivers of its share price. Investors who bought at listing will want evidence that growth is returning soon.
