Defence Transformation Underway
Embedded in EU-wide defence programmes with growing backlog
Indra: Radar Love
From tech consultancy to Spain’s defence sweetheart
Updated: Jul 03, 2025
Aerospace & Defense
mediumeurope
Bull & Bear Case
An overview of the main reasons to invest and the key risks involved.
Bull Case
Strategic National Positioning
Key beneficiary of Spain’s 55% YoY jump in defence spending
Digital Leverage and Space Optionality
Space NewCo and digital pivot offer long-term upside
Bear Case
Execution Risks
M&A spree (~20 targets in play) could dilute focus and create integration drag
Political Overhang
Government ownership and EM&M ties could hinder governance perception
Valuation Discount May Persist
Re-rating relies on continued momentum and investor patience
Investment Thesis
Overview of buy and sell case of the business.
Why Invest?
Key pieces of information about the business that you need to know about.
Defence Transformation Underway
Indra is rapidly evolving from a tech and consultancy firm into Spain’s de facto defence systems integrator. With 95% of its capital allocation now focused on aerospace and defence, the company is embedding itself at the heart of Europe’s rearmament drive. Flagship roles in the FCAS next-gen fighter programme and naval F110 platform show how deeply Indra is integrated across air, land, sea, and cyber.
Strategic National Positioning
Spain’s pledge to hit 2% defence spending by year-end means €10.5bn of spend is in play, with a home-field advantage. Indra is not only majority domestically owned but acts as the coordinator of Spanish contributions to EU defence projects. This grants it quasi-sovereign status in procurement decisions, boosting visibility on contracts and margins alike.
Digital Leverage and Space Optionality
Indra’s digital services unit, Minsait, remains a key contributor (47% of EBITDA), offering resilience and recurring cash flows. Meanwhile, its growing space division (Hisdesat, Hispasat, Deimos) adds optionality in the civil-military satellite segment. Management aims to build a €1bn+ revenue “Space NewCo” by 2030, tying in defence, mobility and IT capabilities.
Catalysts
The key events that could drive investment opportunities and shift markets.
Capital Markets Day (date TBC): Management could use this event to unveil upgraded guidance or hard targets for its €10bn turnover ambition. Investor expectations are rising.
Q2/Q3 Results: Despite Q1 softness, continued strength in defence orders and backlog could reassure investors and support valuation momentum.
M&A Announcements: Strategic bolt-on deals in radar, cyber, or systems integration could expand capabilities and validate the company’s “national champion” strategy.
Spain’s Budget Rollout: Confirmation of defence budget execution, especially through Indra-linked programmes, will reinforce revenue visibility.
FCAS Programme Milestones: Indra is a sensor pillar lead. Progress on this project would cement its role in the EU’s most strategic defence collaboration.
Space NewCo Scaling: Growing into a €1bn+ business by 2030 could be transformative, especially if it combines recurring civil contracts with military payloads.
Key Risks
Key pieces of information about the business risks that you need to know about.
Execution Overstretch
With 20+ M&A targets under review and a sprawling strategic agenda, the risk of missteps or integration issues is real. Indra is targeting both defence consolidation and tech bolt-ons, which could stretch management bandwidth or lead to value dilution if poorly sequenced.
State Interference
The Spanish government owns 28% of Indra and has influence over appointments and strategic decisions. A potential merger with Escribano Mechanical, whose chairman also chairs Indra, raises questions about governance and investor alignment.
Patience Required
Indra’s financials remain lumpy, and Q1 2025 saw a miss on both revenue and net income. While defence order intake is accelerating, full operational leverage and cash flow uplift may take until 2026–27 to materialize.