Khadgam is an Patriotic movie. In which, Koti (Ravi Teja) is a hero wannabe. He has only one goal in life. That is to become a hero and to be called as 'Babu' by the industry people.
Amjad (Prakash Raj) is an auto driver. Though extremely religious Muslim, Amjad is very patriotic about India. His younger brother Azhar(Shafi) is been missing since one year. The cops of Hyderabad arrested a dreadful ISI terrorist Masood. In a bid to get him released, the Pakistan authorities train Azhar and send him across to Hyderabad to create riots and build communal tension. Azhar comes to Hyderabad and stays with his brother Amjad. Azhar's secret activities include devising and executing plans to release Masood.
Radha Krishna (Srikanth) is a sincere and efficient police officer. But he is very serious in nature and has enormous hatred towards Pakistan for the reasons best known to him.
The rest of the story includes how these three protagonists save the terrorist Masood from fleeing to Pakistan.