Key Takeaways:
- Record Demand: Indra Sistemas (IDR) is capitalizing on a global defense spending surge, with its backlog jumping 35% and defense orders expected to exceed €10 billion in 2026.
- Price Projection: Despite the massive order book, our model suggests the stock could actually fall to €56 per share by December 2027.
- Expected Returns: This target implies a disappointing -2.0% annualized return, signaling that the “defense premium” may have stretched the valuation too far.
- Growth vs. Price: While the company is expanding aggressively, including a new €50 million plant in Kansas, the current multiple leaves zero margin for error.
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Indra Sistemas (IDR) is arguably the hottest industrial stock in Spain right now.
Riding the wave of European rearmament, the company has seen its order intake explode. In the first nine months of 2025 alone, the backlog grew by 35%, driven largely by the consolidation of TESS and heavy investment in defense modernization.
Management is executing its “Leading the Future” strategic plan with precision. They recently secured 30 special modernization programs and received over €4.2 billion as the coordinating company for major European defense initiatives.
However, the stock has nearly tripled over the last three years, trading near all-time highs of €58.60.
Great companies do not always make great investments at any price. With the valuation now pricing in flawless execution, is there any upside left for new investors?
See analysts’ full growth forecasts and estimates for Indra Sistemas stock (It’s free) >>>
What the Model Says for IDR Stock
We evaluated Indra’s potential through 2027, balancing the undeniable growth in its order book against its historically high valuation multiples.
Our model suggests the stock has overheated. Even using a robust forecast of 12.3% Revenue Growth (CAGR) and 9.8% Operating Margins, the model projects the stock will settle around €56 by the end of 2027.
This implies a -2.0% annualized return over the next two years.
Essentially, the market has already “paid up front” for the next three years of growth. Unless Indra can significantly exceed these already optimistic expectations, the stock price may stagnate or correct.
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for IDR stock:
1. Revenue Growth (CAGR): 12.3%
Indra is expanding its industrial footprint to meet demand. The company announced a €150 million investment in Spain over the next two years and is tripling its industrial capacity in the country.
Internationally, they are aggressively targeting the U.S. air traffic market with a new €50 million plant in Kansas to support the manufacturing of radars.
We forecast strong revenue growth of 12.3% CAGR through 2027, reflecting the conversion of its massive backlog into delivered sales.
2. Operating Margins: 9.8%
Management highlighted that operating profit grew by 11% in absolute terms in the first nine months of 2025.
The company is also leveraging technology to boost margins, recently launching IndraMind, an AI-powered platform for decision-making and autonomous operations in defense scenarios.
We project operating margins will expand to 9.8%, supported by these high-tech initiatives and operational leverage.
3. Exit P/E Multiple: 18.7x
Indra currently trades at a forward P/E of roughly 26x, which is extremely high compared to its history.
Our model assumes an exit multiple of 18.7x by 2027.
We chose a multiple that is a bit lower than where the stock is trading today to ensure we have a built-in margin of safety. If investor sentiment regarding the “defense super-cycle” cools off even slightly, valuations could contract back toward historical norms, which would act as a major drag on the share price.
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What Happens If Things Go Better or Worse?
The risk appears skewed to the downside at current prices (these are estimates, not guaranteed returns):
- Low Case: If execution stumbles or defense budgets tighten, the valuation could collapse, leading to a -2.6% annual return.
- Mid Case: Even if the company hits all its targets, valuation compression limits the upside to just a 3.2% annual return.
- High Case: Only in a “perfect storm” scenario where the market sustains a very high premium do we see a meaningful 8.4% annual return.
See what analysts think about IDR stock right now (Free with TIKR) >>>
How Much Upside Does Indra Sistemas Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
