CSG’s First Post-IPO Earnings Test Arrives Amid a NATO Ban, a €1.4 Billion Shareholder Dispute and a Short-Seller Attack

Defence contractor CSG reports doubled revenue to €6.7bn but stock down 52% due to short-seller claims, NATO ban on Spanish unit, and minority shareholder dispute.

When Czechoslovak Group releases its first quarterly results as a listed company on 20 May, the headline numbers will almost certainly be impressive. The defence contractor more than doubled revenue in 2025, reaching €6.7 billion, while net profit hit €872 million. Management has guided for sales of €7.4 billion to €7.6 billion this year, with an adjusted EBIT margin of 24% to 25%. Yet the stock trades at €16.05, down more than 52% from its January high, a gap that reflects three overlapping governance and legal storms rather than any lack of demand for 155mm shells.

The shares have fallen roughly 25% in the past month alone, largely because of a critical report from short-seller Hunterbrook that questioned CSG’s production capacity and alleged ties to Russia. Owner Michal Strnad rejected the claims outright on Thursday, pointing to a recent contract with the US military for a large artillery complex in Iowa as proof that such connections do not exist. “A partnership of that nature would be impossible with questionable links,” he argued. Strnad also ruled out selling any of his own shares, calling the current valuation a “clear undervaluation”.

NATO ban remains unresolved

A more persistent headache is the status of CSG’s Spanish subsidiary, Fábrica de Municiones de Granada (FMG). The NATO Support and Procurement Agency placed FMG on a suspension list in July 2025, initially for four months, but then extended the ban indefinitely. The timing is especially sensitive: the 728-page IPO prospectus, published shortly before the January listing, did not disclose the NSPA measure. EU rules mandate that even potential investigations must be reported if they are material for investors.

CSG insists that a comprehensive legal review found no evidence of irregularities or illegal conduct at FMG. The company also notes that FMG can still sell directly to individual NATO member states and does not expect any “material impact” on its business or financial position. The market, however, appears to be pricing in a degree of uncertainty that the company’s denials have yet to dispel.

€1.4 billion row with minority shareholder adds to the distrust

The second governance issue concerns Petr Kratochvíl, a minority shareholder who, according to Czech media, exercised a put option shortly before the IPO, demanding roughly €1.4 billion for his 10% stake in CSG Land Systems. Kratochvíl also holds blocking rights on key decisions.

CSG counters that external legal advisers concluded the put option was not validly exercised ahead of the flotation, and therefore no liability needed to be disclosed in the audited accounts. In a separate development, the group said a pre-IPO claim of €275 million from the sale of non-core assets was fully settled in the first quarter of 2026. Still, the dispute has eroded trust among investors already wary of the company’s ownership structure.

EU financing clock is ticking

On the funding side, CSG is racing against a deadline. The Slovak munitions framework agreement, with a maximum volume of €58 billion, can be financed through the EU’s SAFE programme at an interest rate of just 1%. That would give a huge edge in large defence contracts. But the scheme requires participation by at least two EU member states, and the preferential window closes at the end of May 2026. So far, Romania has denied ministerial-level talks, while Croatia is still evaluating whether to join.

Expansion plans remain ambitious despite the noise

None of the governance distractions are slowing CSG’s strategic push. The group has submitted a bid for the 50% stake in KNDS, the German-French maker of Leopard tanks, held by the Bode-Wegmann family. The offer is mostly cash. KNDS is planning an IPO in early July 2026 at a valuation in the double-digit billions. Jefferies analysts see a full takeover as challenging given the political sensitivity of the tank manufacturer for Berlin and Paris, but note that CSG already supplies chassis for the Caesar artillery system and hulls for the Leopard tank.

At the same time, the company’s venture capital arm, Tech Horizons, is investing in Canadian start-up North Vector Dynamics, which develops counter-drone systems. The market for such technology is expected to surpass $20 billion by the end of the decade. CSG also secured a Western European order for 155mm artillery ammunition worth nearly €250 million in late April, and subsidiary Excalibur International won roughly €2.5 billion in contracts from Southeast Asia. A planned 49% entry into Hirtenberger Defence Systems awaits regulatory approval.

Analyst sentiment remains surprisingly constructive. Moody’s recently upgraded CSG to investment grade. JPMorgan has a price target of €40, and the consensus of nine analysts stands at €35.40, suggesting significant upside if the company can navigate its near-term pitfalls.

On 20 May, the quarterly report will do more than show whether revenue and margin targets are on track. It will be the first chance for management to address the short-seller allegations in a formal, audited setting, to clarify the NSPA situation, and to demonstrate that the Kratochvíl dispute is truly contained. Until then, the share price looks set to remain a battlefield where operational strength is fighting an uphill battle against perceived governance risk.