Reported by Bankinter
Indra (IDR) is finalising an agreement with Santa Bárbara Sistemas (a European subsidiary of General Dynamics) to set up a joint venture aimed at carrying out contracts for wheeled and tracked artillery, valued at €7.240 million.
These contracts were previously awarded by the Government, under the PEM programmes, to two separate temporary joint ventures (UTEs) in which Indra and EM&E hold stakes. In this regard, the proposed joint venture would not alter the ownership of the contracts — which would remain with the successful UTEs — but would act as an industrial vehicle to manage their execution. The shareholding structure is unknown.
Bankinter’s analysis team’s view: We view this news favourably. Primarily because it reinforces visibility regarding Indra’s execution capacity in land-based programmes. This joint venture would complement recent agreements, such as the one signed with South Korea’s Hanwha, and potential collaborations with Rheinmetall and MAN.
This would thus mitigate one of the main risks identified in the medium term — industrial capacity — by facilitating access to already developed platforms and speeding up delivery times. The main unknown factor remains the shareholding structure of the new company and, in particular, the distribution of control amongst the parties. Against this backdrop, we maintain our ‘Buy’ recommendation (Target Price: €58; upside potential: 13.5%) and our investment rationale remains unchanged.
