By Matteo Allievi
(Reuters) -Shares in Spanish defence and technology firm Indra surged on Monday after it reported a 40% jump in first-quarter profit, driven by strong orders as global tensions spur demand for air defences.
Shares in the company were up 8% at 0853 GMT, topping Spain's blue-chip index, which was flat.
After shrinking for decades, European military budgets are on the rise due to heightening tensions between major powers, which are set to lead to higher revenues and margins for defence groups.
NATO member countries have committed to ratchet up their defence spending to 2% of their respective gross domestic product in response to Russia's invasion of Ukraine.
Indra reported a net profit of 61 million euros ($66 million) for January to March, with revenue rising 22% to 1.12 billion euros and all four of its divisions achieving double-digit percentage growth.
More than half of the company's revenue was generated through its tech unit Minsait, Indra said.
Indra's shares have risen by almost 40% since the start of 2024, making it one of the IBEX's best performers this year alongside banks and pharmaceutical firm Rovi.
Indra, which is 28%-owned by the Spanish government, reiterated its year-end revenue target of more than 4.65 billion euros in local currency, announced in February.
"If the performance in the second quarter continues to be so favourable, we believe that the board will raise the targets," Renta 4 analysts said in a note.
Indra is setting up a new space company as it aims to grow within the European military sector, where it competes with the likes of France's Thales and Italy's Leonardo.
Among possible acquisitions in the space industry, Indra Chief Executive Jose Vicente De los Mozos said the company was eyeing a stake in satellite operator Hispasat, which is partly owned by state-controlled grid operator Redeia.
($1 = 0.9295 euros)