CSG’s Market Rout Deepens: 45% Below IPO Peak Despite €14 Billion Backlog and Investment-Grade Upgrade

Czechoslovak Group shares tumble 22% in a month on ceasefire hopes, even as it secures €250M deals, an Azerbaijan JV, and an investment-grade rating.

The Czechoslovak Group is living a contradiction. On one side, the defence contractor is signing multi-year joint ventures, securing hundreds of millions in new orders, and earning an investment-grade credit rating from Moody’s. On the other, its stock has tumbled to an all-time low, leaving investors nursing losses of nearly half their capital since January’s record-breaking IPO.

Shares closed at €18.45 on the Euronext Amsterdam on 29 April, a far cry from the €35.50 all-time high reached just days after the listing. The stock has shed more than 22% in the past month alone. On 30 April, it touched an intraday floor of €17.95 — a fresh record low for the company’s public life.

Ceasefire Fears Hit CSG Harder Than Peers

The sell-off is being driven by growing hopes of a truce between Russia and Ukraine, which has prompted a rotation out of European defence names. But CSG has been hit disproportionately hard. While Rheinmetall and Renk have lost roughly 10% since the start of the Iran-related tensions, and Saab around 12%, CSG has surrendered nearly a third of its value.

The bear case overlooks a structural reality, however. Europe’s ammunition stockpiles are largely depleted after years of high-intensity conflict. The European Commission projects member-state defence spending of €392 billion this year alone, with a decade-long total of roughly €3.4 trillion. A ceasefire would not eliminate demand for munitions — it would shift it from consumption to replenishment and modernisation. Industry analysts describe a restocking cycle lasting 10 to 15 years.

Azerbaijan Joint Venture Adds to Expansion Streak

CSG has signed an agreement to establish VEXA DS, LLC, a joint venture in Azerbaijan. The entity, formed between local subsidiary Excalibur Army Azerbaijan and an undisclosed domestic partner, will repair, maintain and modernise armoured vehicles and other military land platforms. The programme covers several hundred vehicles with a total value in the low hundreds of millions of euros and a time horizon of at least a decade. A modern service facility is also planned, intended to serve as a regional hub.

Technology transfer is a core component, with CSG sharing its vehicle-modernisation know-how to build local capabilities — a move that aligns with Baku’s push to deepen industrial ties with European partners.

The Azerbaijan deal is the latest in a string of wins. In late April, CSG secured a contract worth nearly €250 million to supply long-range artillery ammunition to a European customer. Mid-month, it unveiled drone-defence rounds that soldiers can fire from standard-issue rifles. Strategic joint ventures in Greece and India are also advancing: in Greece, CSG is co-producing large-calibre ammunition with Hellenic Defence Systems; in India, it is securing access to critical raw materials for munitions manufacturing.

CEO Michal Strnad has set an unambiguous target: making CSG Europe’s second-largest defence company.

Investment-Grade Seal of Approval

Moody’s has upgraded CSG’s secured senior debt from Ba1 to Baa3 — the threshold for investment grade — citing improved governance post-IPO, a simplified capital structure and a more conservative financial strategy. Fitch affirms its BBB– rating with a stable outlook.

Moody’s expects adjusted free cash flow of €500 million to €700 million annually in 2026 and 2027, with net leverage staying permanently below two times operating earnings.

The credit profile stands in stark contrast to the equity market’s verdict. CSG raised €3.8 billion in January by placing 15.2% of its shares on the Euronext Amsterdam — the largest defence IPO in global history. Since then, the stock has roughly halved.

Record Backlog, Guided Growth

The operational picture supports the rating agencies’ confidence. Revenue surged 71.7% in 2025 to €6.7 billion, with adjusted EBIT of €1.6 billion and a margin of 24.1%. The order book has grown to €15 billion — the primary article cites €14 billion, reflecting a slight timing difference in reporting — while the pipeline stands at €27 billion. CSG describes itself as Europe’s second-largest producer of medium and large calibres and the global leader in small-calibre ammunition, with roughly 80% of revenue tied to defence markets.

Management guides for 2026 revenue of €7.4 billion to €7.6 billion and an operating margin of 24% to 25%, with a medium-term target of 26% to 28%.

Q1 Results as the Next Catalyst

CSG will report first-quarter numbers on 20 May. The headline figures will be weighed down by one-off costs related to the IPO, which fell in the first quarter. Stripping those out should give a clearer view of underlying operational momentum.

Analysts remain overwhelmingly bullish: nine out of ten rate the stock a buy, with a consensus price target of €35.40 — nearly double the current level. Whether the Q1 report can convince the market that the discount is overdone will be the first real test since the company went public.