CSG’s Stock Hits a New Low Even as $2.5 Billion Air-Defense Deal Lands

Czech defense group CSG sees shares hit all-time low amid market rotation, even as revenue jumps 72% and order backlog swells to €15 billion.

The Czech defense group CSG is living a tale of two realities. On one side, the company is booking contracts at a blistering pace — including a nearly $2.5 billion order for air-defense systems in Southeast Asia, plus two European artillery shell deals worth close to €550 million. On the other, its shares have cratered to an all-time low of €18.45 on the Euronext Amsterdam, a drop of roughly 45% from the 52-week peak of €35.50 reached shortly after January’s initial public offering.

The disconnect between operational momentum and market sentiment has rarely been starker for a newly listed defense stock. The company’s net profit jumped by more than a third to €872 million in the last fiscal year, while revenue surged 71.7% to €6.7 billion. Adjusted EBIT hit €1.6 billion, translating to a margin of 24.1%. Management is guiding for 2026 revenue of between €7.4 billion and €7.6 billion, with margins in the 24% to 25% range, and a longer-term target of 26% to 28%.

Yet investors have been heading for the exits. The stock has shed more than 30% since its January high and lost over 22% in the past month alone. The sell-off is part of a broader rotation out of European defense names, fueled by ceasefire hopes between Russia and Ukraine. While peers like Rheinmetall, Renk, and Saab have fallen roughly 10% to 12% since the onset of Iran-related tensions, CSG has plunged nearly a third — making it the worst performer in the group.

The market’s pessimism overlooks a structural argument that industry analysts say is hard to ignore. European ammunition stockpiles are largely depleted after years of conflict, and the European Commission expects member states to spend €392 billion on defense this year alone, with €3.4 trillion projected over the next decade. A ceasefire would not eliminate demand for munitions, experts argue — it would merely shift the focus from consumption to replenishment, triggering a restocking cycle that could last 10 to 15 years.

CSG, which describes itself as Europe’s second-largest producer of medium and large calibers and the global leader in small-caliber ammunition, derives roughly 80% of its revenue from defense markets. Its order backlog has swelled to €15 billion, with a pipeline of €27 billion. The company’s credit profile has also strengthened: Moody’s upgraded CSG’s secured senior debt from Ba1 to Baa3 — lifting it from speculative to investment grade — citing improved governance post-IPO, a simplified capital structure, and a more conservative financial strategy. Fitch has affirmed 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 below two times operating earnings.

Despite all this, the equity market remains unconvinced. Analysts, however, are sticking to their guns. All nine covering the stock rate it a buy, with a consensus price target of €35.40 — nearly double the current level. Morgan Stanley views the sector-wide pullback as largely a sentiment-driven valuation adjustment rather than a fundamental deterioration. JPMorgan acknowledges concerns about execution risks at a fast-growing company and tight government budgets, but notes that CSG’s financial position is solid, with net debt expected to fall to 0.7 times EBITDA by the end of 2026 — well below the company’s own ceiling.

The next major test comes on May 20, when CSG reports first-quarter results. The headline figures will be weighed down by one-time IPO costs incurred during the period, but adjusted numbers should offer a clearer view of operational health. With billions in fresh orders and a record backlog, management will need to convince the market that the pace of execution can keep up with the scale of the opportunity. If it does, the current skepticism may look like a buying opportunity in hindsight.