This paper presents a novel cascade nonlinear observer framework for inertial state estimation. It tackles the problem of intermediate state estimation when external localization is unavailable or in the event of a sensor outage. The proposed observer comprises two nonlinear observers based on a recently developed iteratively preconditioned gradient descent (IPG) algorithm. It takes the inputs via an IMU preintegration model where the first observer is a quaternion-based IPG. The output for the first observer is the input for the second observer, estimating the velocity and, consequently, the position. The proposed observer is validated on a public underwater dataset and a real-world experiment using our robot platform. The estimation is compared with an extended Kalman filter (EKF) and an invariant extended Kalman filter (InEKF). Results demonstrate that our method outperforms these methods regarding better positional accuracy and lower variance.