Sizing the Pitch, Winning the Share - Upgrade to OW

研报英文原文证据摘录

Sizing the Pitch, Winning the Share - Upgrade to OW

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Executive Summary

Our Top-Down Analysis Shows Equipment Defence Spending in Spain Is Set to

Increase by 2x, Driven by the PEM. Spanish Defence spending reached ~€33bn, or ~2% of

GDP, in 2025, supported by ~€34bn of PEM, which is a special modernization programme

for defence equipment and industrial capabilities, running to 2037 across land, naval,

aerospace, cyber, space and communications. While early funding is boosted by Industry

Ministry pre-financing, cash outlays should increasingly shift to the Ministry of Defence as

programmes move into execution, supporting a material improvement in the spending mix.

We estimate equipment spend could nearly double to ~€21bn by 2030, reaching ~51% of

the defence budget. Further upside above 2% of GDP remains possible, but likely depends

on the 2027 election outcome and would be gradual given fiscal constraints. See our

Economics section.

Together with Our Bottom-Up Analysis, We Expect the Defence Division to Increase

Sales by ~4x in 2030 - We Sit ~13% Ahead of Consensus. Indra’s Defence division is

emerging as the group’s core growth engine, supported by structurally higher Spanish

defence spending and a clear policy tilt toward domestic champions. The division already

has good visibility, with Defence backlog of ~€11.4bn at 1Q26, including ~€6.8bn from

PEM, equivalent to ~4 years of sales coverage under our ramp-up assumptions. Our top-

down and bottom up framework, linking a €40bn+ budget in 2030 with the PEM ramp-up

and improving budget allocation to equipment, points to a step-change in demand.

Combined with a shift toward domestic procurement, this drives material market share

gains for Indra from 7% in 2025 to 17% on our estimates.