Orbital (ASX: OEC) up 15%: investors bet on defence tailwinds

The Future of Flight Isn’t About the Drone: It’s About the Engine

This morning, Orbital Corporation (ASX: OEC) soared 15%, riding a wave of investor excitement following the appointment of Stephen Pearce as CEO and a strong quarterly report. The future of warfare, surveillance, and logistics will not be decided by who builds the biggest drone, but by who can keep it in the air longer, faster, and more reliably.

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Orbital Business Model Explained

OEC is an Australian company recognised as a global leader in designing, developing, and delivering advanced propulsion and fuel systems for unmanned aerial vehicles (UAVs) used in both commercial and military applications. Specialising in high performance, reliable, and efficient UAV propulsion solutions, Orbital’s expertise spans engine design, development, production, and engineering services, as well as ongoing maintenance and support. Its innovative systems power a wide range of drones in the aviation industry, making it a trusted partner for leading UAV manufacturers worldwide.

Orbital’s Global Partnerships Fuel Long-Term Growth

OEC has built a strong portfolio of strategic partnerships that underpin its growth and global reach.

Boeing Partnership

Its long standing relationship with Insitu, a Boeing subsidiary, involves designing and manufacturing heavy fuel engines for UAV fleets such as the ScanEagle, Integrator, and Blackjack. This partnership not only delivers consistent recurring orders but also reinforces Orbital’s credibility through supply to both the US and Australian Defence Forces.

DSO Laboratories Partnership

In Singapore, collaboration with DSO National Laboratories has progressed from designing and prototyping the Veloce 60 engine to securing multi-year production, along with the development of a larger Group 3 engine. This expands Orbital’s presence in Asia and diversifies revenue streams beyond the US market.

Dynamatic Technologies Partnership

In India, a partnership with Dynamatic Technologies will see Orbital integrate its 150cc heavy fuel engine into Dynamatic’s UAV platform, providing a foothold in the country’s growing defence UAV sector. Together, these relationships enhance Orbital’s market position, broaden its customer base, and secure long term revenue visibility through multi year contracts.

Orbital’s Growth Engine: Big Opportunities, One Key Risk

For investors, two strengths immediately stand out. First, defence budgets are on the rise worldwide, and Orbital’s propulsion systems sit right at the heart of that spending wave. Every new UAV program needs engines, and Orbital already has its hardware in some of the most advanced platforms in service. Second, the company’s reach across the US, Asia, and India means it is not tied to the fortunes of a single customer or market, giving it a broader and more resilient growth base.

The main risk to watch is the pace of innovation. UAV technology is advancing rapidly, and staying ahead requires constant engineering progress. If Orbital fails to keep pace, even strong customer relationships could be at risk as competitors step in.

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