Aselsan's EUR 1.65 Billion Air Defence Contract: A Strategic Catalyst for Turkish Defence Growth

The recent EUR 1.65 billion air defense contract secured by Aselsan A.S. marks a pivotal moment in Turkey's defense industrialization strategy and offers compelling insights for equity investors. While the precise financial terms of the contract remain opaque, the broader context of Aselsan's operational resilience, technological innovation, and alignment with global defense trends suggests a transformative impact on its valuation and growth trajectory.

Strategic Resilience and Financial Recovery

Aselsan's credit profile has undergone a remarkable transformation since mid-2022, when its default probability peaked at 0.179. By August 2025, this metric had stabilized at 0.044, reflecting a credit rating upgrade from B2 to A3Aselsan Global^[2]. This recovery is underpinned by the company's “aselsaneXt” initiative, which leverages artificial intelligence to accelerate product development and reduce operational costsAselsan Global^[2]. In H1 2025 alone, Aselsan reported record export contracts totaling $1.3 billion, with a total order backlog of $16 billionASELSAN Advances Multi-Layered Steel Dome Defense^[5]. These figures underscore its ability to convert strategic investments into tangible financial outcomes.

Technological Innovation and Market Position

The EUR 1.65 billion contract, though not explicitly detailed, aligns with Aselsan's expansion of the Steel Dome air defense system—a sovereign project designed to protect Turkish airspace and serve as a competitive export platform. The system's layered architecture, including the KORKUT anti-aircraft gun, HİSAR missile systems, and AI-enhanced GURZ short-range defense, positions Aselsan at the forefront of the global Short Range Air Defense (SHORAD) marketASELSAN Advances Multi-Layered Steel Dome Defense^[5]. This sector, valued at $13.6 billion in 2025, is projected to grow at a 7% CAGR, reaching $25 billion by 2034, driven by rising drone threats and geopolitical tensionsShort Range Air Defense (SHORAD) System Market Outlook 2025-2034^[3].

Aselsan's focus on localization—such as AESA-based radars and directed-energy weapons—reduces reliance on foreign suppliers, enhancing both cost efficiency and strategic autonomyTurkey’s Defense Industry Expansion^[4]. The company's CEO has emphasized ambitions to enter the global top 30 defense firms by 2030, a goal bolstered by its current market capitalization of over $20 billionAselsan Global^[2].

Equity Valuation and Long-Term Growth

The contract's financial impact, while unspecified, can be contextualized through Aselsan's historical performance. For instance, the company's 2024 revenues grew 13% year-on-year to TL120 billion ($3.29 billion), with an EBITDA margin of 25%Turkey’s Defense Industry Expansion^[4]. A EUR 1.65 billion contract (approximately $1.8 billion) would represent a significant addition to its revenue base, particularly if spread over multiple years. Assuming conservative revenue recognition timelines, this could translate to a 10–15% annual revenue boost, directly enhancing earnings per share and supporting its premium valuation.

Moreover, Aselsan's strategic partnerships, such as its cooperation with PolandAselsan Global^[2], signal expanding international reach. The global defense industry's response to geopolitical risks—exemplified by the Russia-Ukraine war—has historically benefited firms with advanced, modular systems like Aselsan's Steel DomeShort Range Air Defense (SHORAD) System Market Outlook 2025-2034^[3]. This trend, coupled with Turkey's exclusion of foreign systems (e.g., Russia's S-400) in favor of indigenous solutionsASELSAN Advances Multi-Layered Steel Dome Defense^[5], strengthens Aselsan's long-term growth narrative.

Risks and Considerations

Investors must remain cognizant of potential risks, including delivery delays or geopolitical shifts that could disrupt export pipelines. However, Aselsan's improved credit metrics and diversified order book mitigate these concerns. The company's emphasis on AI-driven production and its $616 million investment in radar and photon detection technologiesTurkey’s Defense Industry Expansion^[4] further insulate it from supply chain vulnerabilities.

Conclusion

Aselsan's EUR 1.65 billion air defense contract is not merely a financial milestone but a strategic catalyst. It reinforces the company's role as a leader in next-generation air defense, aligns with global demand for sovereign, AI-enhanced systems, and positions Turkey as a key exporter in a rapidly expanding market. For equity investors, the combination of robust financials, technological differentiation, and geopolitical tailwinds makes Aselsan a compelling long-term bet.