Innovations drive Indra Sistemas' growth in H1 25

Indra Sistemas, S.A. reported a rise in H1 25 revenue, driven by double-digit growth rates of backlog and order intakes. Accelerated deployment of the company's industrial plan led to a reduction in its lead time, guaranteeing delivery. In addition, Indra Sistemas also implemented a new organization model which enables the company to boost innovation and strengthen its presence in key markets.

Indra Sistemas, S.A. is a leading Spanish IT Services & Consulting company founded in 1992, with headquarters in Alcobendas, Community of Madrid. It has around 60,590 employees. The company specializes in the design, development, manufacture, and marketing of information technology, defense, and simulation systems. The sale of systems and services are its two core businesses. Indra provides end-to-end solutions ranging from air traffic control systems, ticketing and urban mobility platforms, defense electronics, and cyber security.

The company operates through four divisions, including Minsait (45% of H1 25 revenue), Defense (37%), Air Traffic Management (ATM) (14%), and Mobility (4%). In addition, its revenues are geographically split as follows: Spain (51% of H1 25 revenue), America (20%), Europe (21%), and Asia, Middle East and Africa (8%).

Robust H1 25 performance

Indra Sistemas released its H1 25 results on July 23, 2025, and reported a 6.3% y/y increase in revenue, reaching €2,450m, driven by 32.5% y/y growth in backlog and 18% y/y increase in order intake. The Defense segment witnessed a 53% y/y growth in orders, boosted by Eurofighter project and radar contracts in Germany and Oman. ATM segment experienced a 38% y/y rise in orders due to radars contract in UK and Spain. Likewise, the Mobility segment experienced a 41% y/y growth in orders driven by tolling systems in Colombia and Urban Transport Management Systems in Ireland.

EBITDA increased by 15.4% y/y to €265m, with margins expanding by 85bp to 10.8%, driven by business mix and efficiency improvements. Net income reported 88.6% y/y increase, reaching €215m, driven by operational improvements and one-off impact of TESS collaboration.

Enhancing SDR capabilities with Bittium

Indra Sistemas signed an Agreement of Intent with a Finnish company called Bittium on July 18, 2025. This collaboration aims to jointly develop fully European Software Defined Radio (SDR) for tactical military communications by combining Bittium’s advanced radio communication technology with Indra Sistemas’ 15 years of experience in SDR and waveform development.

It also highlights the growth of Indra Sistemas as a leader in defense modernization and critical communication systems. This collaboration enables the company to position itself to capture additional market in tactical communications domain, potentially moving up to new revenue streams and ensuring long-term growth prospects.

Continued strong performance

Indra Sistemas has demonstrated robust performance over FY 21-24, achieving a revenue CAGR of 12.7%, reaching €4.9bn in FY24. This growth was primarily driven by outstanding growth in the Air Traffic Management (ATM) and Defense divisions. EBITDA rose at a CAGR of 20.5% to €475m in FY24, with margins expanding by 176bp to 9.7%. Net income rose at a CAGR of 24.6% to €278m in FY 24. These results were driven by reduced impact of problematic projects, better mix and consistent focus on cost efficiency.

The company experienced a rise in FCF from €54.9m to €210m over FY 21-24, bolstered by a growth in cash flow from operations. The cash and cash equivalent declined from €1,200m to €556m on account of repayment of debt. This resulted in total debt to decrease from €1,580m to €662m, which led to a subsequent improvement in the total debt-to-equity ratio from 18.8x in FY 21 to 5x in FY 24.

Sopra Steria Group, a regional peer, achieved a revenue CAGR of 7.3%, reaching €5.8bn over FY 21-24. EBITDA grew at a CAGR of 13.2% to €644m, with margin of 11.1%. In addition, net income rose at a CAGR of 10.2%, reaching €251m.

Impressive stock returns

Over the past year, Indra Sistemas’ stock rose sharply by 97.5% over the past year, indicating robust performance and significant investor gains over the period. In comparison, Sopra Steria Group delivered lower returns of 12.2%.

Indra Sistemas is currently trading at P/E of 18x, based on the FY 25 estimated EPS of €2, which is higher than its 3-year historical average of 11.5x and Sopra Steria Group (13.2x). The company is currently trading at an EV/EBITDA of 9.9x, based on the FY 25 estimated EBITDA of €627.6m, which is higher than its 3-year historical average of 5.3x and that of Sopra Steria Group, which is trading at 6.4x.

The stock is monitored and liked by 14 analysts, with 12 having ‘Buy’ ratings and just two having ‘Hold’ ratings for a target price of €40.6, reflecting 11.2% upside potential from the share's current price. Analysts’ views are further supported by an anticipated revenue CAGR of 10.6% over FY 24-27, reaching €6.6bn. EBITDA CAGR of 15.4% to EUR839m, with margins expanding by 154bp of 12.8%. In addition, analysts estimate a net profit CAGR of 15.9% to €431m, with EPS expected to increase to €2.4 in FY 27 from €1.6 in FY 24. Likewise, analysts estimate no change in EBITDA but net profit to grow at a CAGR of 12.4% for Sopra Steria Group.

Overall, Indra Sistemas has demonstrated strategic execution and operational resilience. The company has a clear focus on innovation and global expansion to capitalize on emerging opportunities across its core sectors. However, the company faces significant cybersecurity risks due to its involvement with sensitive defense and IT projects. It is also exposed to geopolitical and regulatory uncertainties and is dependent on government spending, which can directly impact defense and aviation projects.