Safran (AO) | Buy | From inertial navigation to AI, Safran's Defence portfolio comes of age

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Safran (AO) | Buy | From inertial navigation to AI, Safran's Defence portfolio comes of age

Safran Buy | Target Price: EUR385.00

In Equipment & Defence, the group sells landing gears, electrical systems and and aerosystems (inc fuel and safety systems) as

well as actuators (Collins business acquired last year), avionics, space equipments (including thrusters, optics and telemetry) and

a long tail of Defence activities such as Intelligence, Surveillance & Recognition solutions (including Preligens AI now on path to

reach EUR75m in 2026 from EUR 28m achieved at the time of the acquisition in 2023), Counter drone warfare equipment, Navwar

and resilient inertial navigation systems, precision strikes (guided bombs), as well as autonomy aand optronics solutions. The

business is platform agnostic and serves a multitude of platforms.

Investing in high-growth equipment opportunities

The site visit of Safran Electronics & Defence sub-division, which now regroups Collins Actuators, Avionics and Space and Defence

activities. The group estimates that the sub-division should make EUR 5bn in 2026 from 19000 people occupied over 58 sites,

highlighting the significant ongoing momentum enjoyed by the segment. If one strips out the consolidation of Collins (est. EUR

1.75bn in 2026E vs EUR 0.7bn in 2025), and make some adjustments for the civil portion of Space (whose total revenues might be

“a few hundre millions” and civil avionics, we estimate the Defence sub-segment is growing at 25-30% in 2026E (accelerating from

a CAGR of 17% seen between 2022-2025 and consistent with the 1.6x book to bill and 60% order intakes reported last year).

Between 26E-30E, the group is therefore confident that this defence sub-segment is set to grow at 26-30E sales CAGR in the high