The CSG Conundrum: A €42 Billion Backlog Can't Stop a 53% Rout

Czech defence contractor CSG posts €6.7B revenue and €42B backlog, yet shares collapse amid short-seller attack and NATO blacklist – analysts still see 100% upside.

Investors in the Czechoslovak Group (CSG) are grappling with a stark paradox. The Czech defence contractor has reported record revenue of €6.7 billion, holds a €42 billion order backlog, and enjoys unanimous buy recommendations from analysts. Yet its stock has collapsed roughly 53% since the January high, trading at €15.84 — dangerously close to its 52-week low. The disconnect between booming fundamentals and a plummeting share price has become one of the most glaring in the European defence sector.

The sell-off has twin catalysts. In early May, short-seller Hunterbrook Media published a report alleging that CSG is not a genuine ammunition manufacturer but rather a refurbisher of ageing stockpiles, a business model with a finite shelf life once global inventories run dry. The accusation triggered a single-day drop of more than 13%. Adding to the pressure, the NATO Support and Procurement Agency (NSPA) placed CSG’s Spanish subsidiary, Fábrica de Municiones de Granada (FMG), on a blacklist — a move critics say was conspicuously absent from the IPO prospectus, despite EU rules requiring disclosure of material risks.

CSG has fought back on both fronts. The company insists it manufactured roughly 630,000 rounds from its own facilities last year and plans to raise that by 20% in 2026, including 70,000 rounds from a new production line in Slovakia. Management also rejects the NSPA blacklist as unfounded, pointing to a forensic audit that found no irregularities, and notes that FMG continues to deliver directly to individual NATO member states — which collectively spend far more on defence than the agency itself. Legal action against Hunterbrook is under consideration.

The short-seller’s doubts extend to production capacity. Hunterbrook estimates the key production line can output between 100,000 and 280,000 artillery rounds annually, versus management’s stated 630,000. CSG dismisses the estimate, citing the due diligence performed by banks during its IPO. The Spanish subsidiary is strategically vital: it manufactures large-calibre ammunition for artillery and tanks, a segment that recently accounted for nearly two-thirds of group revenue.

Analysts remain firmly behind the stock. Moody’s recently upgraded CSG to investment grade. JPMorgan sees a target of €40, while the consensus price target among nine analysts stands at €35.40 — more than double the current level. All nine rate the shares a buy. For 2026, the board targets revenue of €7.4 billion to €7.6 billion and an operating EBIT margin of 24-25%, with a medium-term goal of 26-28%. The annualised volatility, however, sits at nearly 78%, reflecting extreme market skittishness.

Amid the turmoil, CSG is pressing ahead with expansion. The group has agreed to acquire a 49% stake in Austria’s Hirtenberger Defence Systems, adding mortar ammunition to its portfolio — a deal pending regulatory approval. A framework agreement with Poland’s PGZ covers joint development of engines for unmanned systems and rockets. Through its Excalibur International subsidiary, CSG secured contracts worth nearly USD 2.5 billion for air defence systems in Southeast Asia.

All eyes now turn to 20 May, when CSG will publish its first quarterly results as a listed company. That report must demonstrate whether the IPO costs have eroded margins and whether recent orders are already feeding through to cash flow. With the stock hovering near its 52-week trough and a short-seller thesis hanging over the name, the numbers will either vindicate management or deepen the crisis of confidence. Seldom has the gap between analyst optimism and market reality been so wide.