Rheinmetall’s Powder Plant Bet: A €650 Million Answer to Shifting Threats and Tighter Sanctions
Published on 07/27/2026 at 10:31 | Redaktion boerse-global.de
The defence sector rarely moves in straight lines, and Rheinmetall’s latest week is a case in point. The Düsseldorf-based group secured a new Bundeswehr order for 56 heavy tractor units worth €60.5 million, broke ground on one of Europe’s largest powder factories, and fielded a fresh headwind from Beijing — all while analysts at Bank of America trimmed their price target by nearly 27%. The net result for shareholders? A stock that has clawed back some ground from its late-June lows but still sits roughly 30% below its 200-day moving average.
The Bundeswehr order, placed through Rheinmetall MAN Military Vehicles, calls for delivery of the “Elefant 2” heavy-duty semi-trailer trucks in 2026 and 2027. The vehicles are designed to move armoured hardware across long distances quickly, and the contract extends a framework agreement originally signed in 2018. The unarmoured Elefant 2 complements the already-delivered Mammut heavy transporter, both built at the same plant. For a group whose order book remains enormous, the €60.5 million deal is a steady drip rather than a gusher — but it underscores the persistent demand for conventional logistics capacity even as the nature of modern warfare evolves.
That evolution is precisely what has Bank of America rethinking its numbers. The US bank slashed its Rheinmetall price target from €1,770 to €1,300, though it maintained a “Buy” rating. The rationale is telling: analysts see NATO procurement priorities shifting away from classic large platforms and munitions toward drone technology and precision weapons. That recalibration, they argue, could temporarily compress the valuation multiple for Rheinmetall’s traditional core business. The new target still implies roughly 24% upside from current levels, so the move is more a recalibration of expectations than a vote of no confidence.
Meanwhile, the group is doubling down on the kind of industrial capacity that underpins its traditional strength. On 22 July, Rheinmetall broke ground on the expansion of its powder plant in Aschau am Inn, Bavaria. The company is investing €350 million at the site itself, with the broader “Firepower” programme totalling €650 million group-wide. Current annual output stands at 1,700 tonnes of powder and 300,000 propellant charge modules. Within 24 months, the company aims to add 2,500 tonnes of powder, more than five million combustible components, and over one million modular propellant charge modules — with full capacity targeted by 2028. The workforce at Aschau is set to grow from 800 to 1,400 employees, and production on the new lines is expected to begin in 2027.
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The expansion is not happening in a vacuum. On Thursday, China imposed export controls on Rheinmetall and 13 other European companies, targeting goods with both civilian and military applications. The group has signalled that the restrictions will not derail its growth plans, and the Aschau investment — alongside the new 155-mm artillery munitions line in Unterlüß, which delivered its first shells to Ukraine in mid-July — demonstrates a determination to build domestic capacity regardless of external supply-chain pressures.
Adding another layer to the story, the German government is reportedly planning to award Rheinmetall a non-tendered contract to develop a laser weapon system for drone defence. Three demonstration units for the navy are envisioned, with delivery by the end of the decade and a contract value in the mid-triple-digit million range. The plan has drawn criticism from Green Party budget expert Sebastian Schäfer, who argues that Australian supplier EOS offers more powerful systems at significantly lower cost. Rheinmetall CEO Armin Papperger’s response was characteristically blunt: “We can deliver.”
The laser initiative aligns with broader NATO momentum. At the alliance’s Ankara summit in early July, a so-called “Innovation Scale-up Package” was agreed, with ten financial institutions — including Deutsche Bank — committing $210 billion to the defence industry. The “Drone Edge” initiative alone is expected to channel $40 billion into drone defence over five years, providing a tailwind for exactly the kind of technology Rheinmetall is now pursuing.
On the trading floor, the stock closed Friday at €1,032.60, up 1.29% on the day, and added another 1.59% on Monday to reach €1,049.00. That marks a continued recovery from the 52-week low of €902.50 hit in late June, but the gap to the 52-week high of roughly €2,000 — set in autumn 2025 — remains a chasm of about 48.55%. The relative strength index sits at a neutral 50.1, offering no clear directional signal.
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The long-term picture, as the Weltwoche has noted, puts the recent pullback in perspective: Rheinmetall’s shares have multiplied nearly twentyfold since the start of the war in Ukraine. That staggering run means the current valuation is acutely sensitive to growth expectations — and those expectations are now being shaped by a three-way tug-of-war between booming order books, shifting NATO procurement priorities, and the new geopolitical friction with Beijing.
All eyes now turn to 6 August, when Rheinmetall reports its quarterly results. The numbers will reveal whether the group’s record backlog is finally translating into revenue and margin expansion — or whether the market’s cautious repricing has further to run.
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