Dassault Aviation Soars: India's Deepening Defense Ties Fueling Investor Optimism in February 2026

Dassault Aviation Soars: India's Deepening Defense Ties Fueling Investor Optimism in February 2026

Shares of Dassault Aviation SA (DUAVF), the renowned maker of the Rafale fighter jet, are drawing significant investor interest in February 2026, driven by India's escalating defense modernization efforts and a rapidly solidifying strategic partnership with France. This resurgence in investor confidence follows recent clearances for substantial orders of Rafale jets by the Indian government, positioning Dassault Aviation for sustained long-term revenue visibility and cementing France's role as a pivotal defense partner for New Delhi. The Indian Air Force (IAF) faces a critical shortage of fighter squadrons amid heightened geopolitical tensions with neighboring countries, making these acquisitions crucial for national security.

The Catalyst

The primary catalyst for this heightened investor attention is the series of defense agreements and procurement clearances between India and France in early 2026. During French President Emmanuel Macron's visit to India from February 17–19, 2026, the bilateral relationship was elevated to a "Special Global Strategic Partnership." A cornerstone of this enhanced partnership is a potential €30-35 billion (approximately US$40 billion) contract for 114 additional Rafale fighter jets for the IAF. This follows the Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, granting Acceptance of Necessity (AoN) for the Multi-Role Fighter Aircraft (MRFA) program, which includes these 114 Rafales.

Furthermore, the Indian Navy is in the process of procuring 26 Rafale-M (Marine) variants, with deliveries expected to commence in 2029. Discussions are also underway for an additional 31 Rafale Marine jets, which could potentially expand India's carrier-based strike force to 57 jets, surpassing even the French Navy's Rafale-M inventory. This emphasis on naval aviation underscores India's ambition for credible sea control in the Indian Ocean Region. The new orders underscore India's commitment to diversifying its defense imports beyond traditional suppliers and bolstering its indigenous manufacturing capabilities under the "Make in India" initiative. Notably, out of the 114 ordered Rafale fighter jets, 96 are planned to be made in India, indicating a significant push for technology transfer and domestic production. India and France also renewed their defense cooperation agreement for a period of 10 years and signed a memorandum of understanding for the manufacturing of Hammer missiles in India through a joint venture between Bharat Electronics Limited (BEL) and Safran.

Financial Forensics

Dassault Aviation has demonstrated a strong financial position, bolstered by its robust order backlog. As of June 30, 2025, the company's backlog reached a new record of €48.3 billion, including 186 Rafale Export, 53 Rafale France, and 75 Falcon jets. Defense export sales significantly increased to €949 million in the first half of 2025, compared to €552 million in the first half of 2024. The company delivered 26 Rafale fighter jets in 2025, slightly exceeding its initial forecast, with 15 for export and 11 to France.

Despite a slight dip in net income for the first half of 2025 to €386 million (down from €442 million in H1 2024), partly due to a tax surcharge in France, Dassault Aviation’s adjusted operating income saw an increase to €180 million in H1 2025 from €170 million in H1 2024. The company's available cash also saw a significant increase, standing at €9,547 million as of June 30, 2025, primarily driven by advances received on Rafale export orders.

Dassault Aviation Financial Highlights (H1 2025 vs. H1 2024)

Metric	H1 2025	H1 2024	Change (%)	Source
Order Intake	€8,075 million	€5,134 million	+57.2%
Adjusted Net Sales	€2,847 million	€2,538 million	+12.2%
Backlog (as of June 30)	€48,290 million	€43,224 million	+11.7%
Adjusted Operating Income	€180 million	€170 million	+5.9%
Adjusted Net Income	€386 million	€442 million	-12.7%
Available Cash	€9,547 million	€8,434 million	+13.2%

Note: Backlog comparison is H1 2025 vs. December 31, 2024. Order Intake and other income statement items are H1 2025 vs. H1 2024.

Technically, Dassault Aviation shares have shown strong momentum. On February 18, 2026, the stock reached a new historic high of €349.80, surpassing its previous peak. The stock price remains well above its 50-day moving average, signaling a strong buying momentum. While some technical indicators like the Bollinger Band suggest a potential short-term drop, long-term moving averages indicate positive forecasts, with a 3-month Moving Average Convergence Divergence (MACD) signal turning positive on February 18, 2026.

Market Impact

The significant orders for Rafale jets are a major boost for Dassault Aviation, providing long-term revenue visibility and strengthening its position in the global defense market. For the Indian market, this deepening partnership reinforces the "Make in India" initiative, with a substantial portion of the new Rafale jets to be manufactured domestically, potentially involving technology transfer. This will likely benefit Indian aerospace and defense materials market, which is projected to grow at a CAGR of 6.7% from 2024 to 2030, reaching US$411.9 million by 2030. The broader Indian aerospace and defense market is also expected to grow from USD 19.81 billion in 2025 to USD 26.32 billion by 2030, at a CAGR of 5.84%.

This trend is also highly beneficial for Indian defense stocks like Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), and other private sector players, as they are increasingly integrated into the supply chain and benefit from increased domestic procurement. The Indian government's target of achieving a defense manufacturing output of US$34.7 billion and exports of US$5.8 billion by FY29 underscores the long-term growth potential in this sector. The focus on co-development and co-production with France also opens doors for Indian firms to gain advanced technological expertise.

Moat Analysis

Dassault Aviation possesses a strong economic moat primarily through its highly specialized defense technology, particularly the Rafale fighter jet. This "omni-role" aircraft, with its proven capabilities and ongoing upgrades, represents a significant barrier to entry for competitors due to the immense capital, R&D, and expertise required to develop a comparable system. Furthermore, long-term government-to-government defense contracts, like those with India, create substantial order backlogs and ensure stable revenue streams for decades. The company's 26% stake in Thales, a key defense electronics player, further strengthens its position by integrating critical systems.

Investment Play: For investors, Dassault Aviation represents a long-term play on global defense spending, driven by geopolitical realities and the continuous need for advanced military aviation. Its strategic partnerships and focus on high-margin defense exports, coupled with a record backlog, provide a degree of stability and growth potential in a sector often shielded from broader economic cycles.

Key Takeaways

• Strong Order Pipeline: India's multi-billion dollar orders for 114 Rafale fighter jets for the IAF and up to 57 Rafale-M jets for the Navy ensure significant revenue for Dassault Aviation for years to come.
• Strategic Partnership Deepening: The elevation of India-France ties to a "Special Global Strategic Partnership" signals sustained cooperation beyond just sales, including co-production and technology transfer, which benefits both nations.
• "Make in India" Boost: The localization of Rafale production in India aligns with the "Make in India" initiative, fostering indigenous defense manufacturing and creating opportunities for Indian defense companies.
• Geopolitical Tailwinds: India's need to modernize its air force amid tensions with China and Pakistan provides a strong underlying demand driver for advanced fighter jets like the Rafale.
• Robust Financials: Dassault Aviation's record order backlog and healthy cash position underscore its financial resilience and capacity to execute large-scale contracts.

FinScann Verdict

The unfolding defense cooperation between India and France, highlighted by the substantial Rafale jet orders, presents a compelling investment thesis for Dassault Aviation (DUAVF). With a robust order book and a strategic commitment to co-production under the "Make in India" banner, the company is exceptionally well-positioned to capitalize on India's burgeoning defense spending and long-term modernization goals. Investors should eye Dassault Aviation as a strong candidate for a long-term, defense-focused portfolio, recognizing its established market position and the critical nature of its products in the current global geopolitical landscape.

Q: What is the latest order for Rafale jets by India? A: India's Defence Acquisition Council has cleared a proposal to acquire 114 Rafale fighter jets for the Indian Air Force, estimated at around ₹3.25 lakh crore (US$40 billion). Additionally, the Indian Navy is procuring 26 Rafale-M variants, with potential for another 31, bringing the total naval order to 57 jets.

Q: How does the "Make in India" initiative impact the Dassault Rafale deal? A: The "Make in India" initiative is a significant component, with plans for 96 out of the 114 new Rafale jets for the IAF to be manufactured domestically in India, involving technology transfer and boosting local defense production. This fosters indigenous capabilities and creates opportunities for Indian defense firms.

Q: What are the current financial indicators for Dassault Aviation? A: As of June 30, 2025, Dassault Aviation reported a record backlog of €48.3 billion and available cash of €9,547 million. Adjusted net sales for the first half of 2025 were €2,847 million, with an adjusted operating income of €180 million. The stock recently hit a new historic high of €349.80 on February 18, 2026.

Q: Why is India increasing its defense ties with France? A: India is strengthening its defense ties with France to modernize its armed forces, address a critical shortage of fighter squadrons, and enhance its strategic autonomy amidst geopolitical tensions with China and Pakistan. France has proven a reliable defense supplier, and the partnership extends to co-development and co-production of advanced technologies.

Q: What is the outlook for India's aerospace and defense market? A: India's aerospace and defense market is experiencing significant growth, projected to reach USD 26.32 billion by 2030 at a CAGR of 5.84%. Government initiatives like "Make in India," increased defense budgets, and a focus on indigenization and exports are driving this expansion, creating substantial opportunities for both public and private sector players.

Disclaimer: For information only; not investment advice. Stock market investments carry risks. Please consult a SEBI-registered advisor before investing. FinScann assumes no liability for decisions made based on this report.