Tonbo Imaging India (TIIL), founded by technologists Arvind KL, Ankit Kumar and Cecilia D’Souza, is a global defence electronics original equipment manufacturer (“OEM”). It design, develop and manufacture sensing, processing, communication and guidance systems for surveillance, reconnaissance, targeting, and control.

Portfolio of products of the company span the electromagnetic spectrum – visible imaging based on what the human eye can see, to long wave infrared and multi-sensor imaging which are based on heat signatures of objects emitting infrared radiation. It has developed a product portfolio including thermal imaging cores, weapon sights, hand-held thermal imaging binoculars, targeting systems, missile seekers, fire control systems, missile guidance systems amongst others to enable autonomy on the battlefield. Its products are deployed in programs ranging from remote weapon stations (“RWS”) and missile seekers to situational awareness systems, optical reconnaissance payloads, and driver vision enhancement systems for armoured vehicles.

Its products are divided into tactical systems and platform systems with former accounting for 58.37% of revenue from operations in FY26 and latter about 39.93%. Its tactical systems include Arjun, Spartan and Bloodhound etc., for armed and police forces in combat situations including counter insurgency and anti-terror operations.

The company is one of the few companies in India with no dependence on external technology partners as it owns 100% of its intellectual property since Fiscal 2024, pursuant to assignment agreements dated March 11, 2024 through which the company purchased intellectual property from CEAQ Singapore. The proprietary technology ranges from optics to embedded software and electronics.

With over 28,000 systems deployed across 24 countries, as of June 30, 2026, the company is a recognized OEM providing a diverse suite of field-proven electro-optic products free from export restrictions under International Traffic in Arms Regulations (“ITAR”). The company is the largest manufacturer, in terms of sales value, of thermal imaging systems to government and defence agencies in India over the period of April 2024 to March 2026. In addition, it’s market share of thermal imaging exports from India was 94% in terms of units, positioning it as the largest exporter of thermal imaging systems from India by units shipped between FY24 and FY26.

Its customers include global militaries, law enforcement and homeland security agencies and other global defence OEMs. As of June 30, 2026, it has supplied to 24 countries including India, Armenia, Romania, Slovenia, USA, Morocco, South Korea, UAE, Philippines, Singapore, North Macedonia, Australia and Taiwan. It design and supply ITAR-free strategic defence electronics, placing it among the few global OEMs able to deliver advanced technologies without geopolitical export constraints. This capability offers strategic leverage to countries pursuing defence autonomy and resilient supply chains and enable it to meet rising demand for unrestricted systems as militaries modernise. Revenue from exports accounted for 5.57% of revenue from operations in FY26 and that was 65.52% in FY25 and 48.61% in FY24.

Supply to Indian government accounted for 71.19% of revenue from operations in FY26 (up from 32.30% in FY25), foreign governments 3.34% (down from 57.07% in FY25) and private system integrators 24.10% (up from 9.63% in FY25). FY24 and FY25 had the benefit of execution of a large European order worth Rs USD 55 million [Rs 452.7 crore @ Rs 82.30/USD) received in FY24. However, as it did not receive any large order from such customer in Fiscal 2026 or Fiscal 2025, resulting in a reduction in international revenue especially that from Europe.

The company operates an asset light business model through horizontal integration: core design and intellectual property (both assigned to it and developed indigenously) (“IP”), while manufacturing is outsourced to certified electronics manufacturing services (“EMS”) partners, including, Kaynes Technology India Limited and Avalon Technology and Services Private Limited. The company prototype its pilot engineering units in its R&D centre, then scale production through EMS partners under non-exclusive contract manufacturing arrangements, issuing purchase orders that set out the required product specifications.

The issue, Objects of the issue

The offer comprises only OFS of 12174046 equity shares of Rs 2 each. The OFS comprises sale of 2299700 equity shares by the promoters/promoter group [ Arvind K Lakshmikumar 1150000 shares, Ankit Kumar 580000 shares, Cecilia D’souza 230000 shares, Vinimaya Advisory LLP 339700 shares], 9874346 equity shares by investor selling shareholders.

To benefit from stock exchange listing of its equity shares.

Strengths

Leading defence technology solutions provider with pioneering proprietary technologies

Driving innovation in defence electronics through in-house R&D with an asset light business model

Among the few defence electronics OEMs with a wide acceptability across the globe

Diversified defence product portfolio with deployability across all domains

Expertise spans design capabilities across electro optics and infrared systems (“EO/IR”) and embedded vision systems serving both – Indian and global companies.

It is a supplier under ‘Indigenously-Designed, Developed and Manufactured (IDDM)’ for defence sector.

Order book as of Jun 2026 end stood at Rs 314.24 crore[Domestic Rs 231.87 crore; international Rs 82.37 crore], which translates into 0.86 times of its FY26 revenue.

Weaknesses

Business is cyclical in nature on account of it being geopolitically driven and subject to government budget cycles. Also depends on competitive tendering process for domestic supply to GOI and any delay in tendering and award will also impact the operations.

Largest customer accounted for 13.78% of revenue from operations in FY26 and top 5 about 53.03%, top 10 about 77.83%.

As the company is dependent on limited global suppliers for critical components and other raw materials, the scarcity and cost of such critical components and raw materials could adversely affect the business.

Operate in an industry which is highly regulated and are subject to stringent government regulations.

Orders with significant R&D component can be cancelled by customers if there is any delay in product development.

Have a history of negative cash flows from operating activities and decrease in cash and cash equivalents.

Inability to introduce new products and respond to changing customer preferences in a timely and effective manner, may have an adverse effect on business.

Dependent on its contract manufacturers for the large scale manufacturing of most of its products and thus any delay by contract manufacturer may impact on the operations.

Certain rights granted to its investors under the Shareholders’ Agreement may affect its operations post-listing, and certain provisions of the Shareholders‘ Agreement will continue to survive the listing of the Equity Shares. Each of Florintree, HBL and CEAQ Singapore shall have a right to nominate one director on the Board, for so long as each of them hold 5.00% of the total shareholding of the company on a fully diluted basis. Similarly, each of Florintree, HBL, Celesta Capital II LP, Edelweiss Value and Growth Fund and Artiman Ventures shall have the right to appoint an observer on the Board.

Its products are complex and technologically advanced and could have unknown defects or errors which could lead to accidents and injury of other aerial or ground objects, including living beings, which in turn may have an adverse effect on business.

Valuation

Consolidated re-stated revenue in fiscal ended Mar 2026 stood lower by 23% to Rs 362.65 crore. Fall in revenue is primarily on account of delays in the execution of certain international orders due to disruptions arising from the West Asia conflict, as well as the deferment of certain anticipated orders from Fiscal 2026 to Fiscal 2027, which resulted in an impact on revenue recognition during the year. With OPM decline by 290 bps to 17.3%, the de growth of OP was 34% to Rs 62.67 crore. Finally, net profit was lower by 30% to Rs 50.88 crore.

For the three months ended Jun 2026, the sales were Rs 36.01 crore and at operating level it was a loss of Rs 25.06 crore and at net profit level it was a loss of Rs 17.74 crore. Revenue from operation in the three months ended June 30, 2026 is hit by seasonality of business (majority of revenue typically accrue in H2) and slow execution. And the loss for the period is primarily attributed to lower revenue recognition in addition to expenses like employee benefits expenses and depreciation which are relatively uniformly distributed over the full Fiscal.

On the post issue equity, the EPS for fiscal ended Mar 2026 was Rs 8.9. On the upper price band, the PE works out to 78.7 times of its FY26 EPS. P/BV stood at 7.4 times and EV/Sales stood 11.3 times. Based on net profit for FY26, the ROE stands at 9.4%.

In comparison, the Paras Defence, that is into manufacture of infrared lenses and thermal components quotes at a PE 122.8 times of its FY26 EPS. Paras’s ROE was 12.4% and its OPM for FY26 was 25.3%. Similarly Data Patterns, that manufactures electronic subsystems for surveillance including radars quotes at a PE of 93.8 times. Its ROE was 14.2% and FY26 OPM was 40.1%. Astra Microwave & Zen Technologies, which focused on specialized electromechanical, radar and sensor systems quotes at a PE of 82.4 times and 77.6 times respectively. The ROE of Astra was 15.2% and FY26 OPM was 28.7%. The ROE of Zen Tech was 10.2% and FY26 EPS was 35.6%. Bharat Electronics though not an apple to apple comparable player but of larger player interms of sales and product range quotes at a PE of 46 times. Its ROE was 25.2% and FY26 OPM was 29.2%.