Czech Ammunition Giant CSG Shares Surge 28% on Prague Stock Exchange Debut

Jan 23, 2026 - 20:00

Shares in Czechoslovak Group (CSG), Europe’s largest privately-held ammunition manufacturer, surged 28% on their first day of trading on the Prague Stock Exchange, reflecting surging investor appetite for defence stocks as the continent embarks on its largest military rearmament since the Cold War. The debut on January 23, 2026, valued the Czech industrial conglomerate at €8.2 billion, making it the largest IPO in Central European history.

CSG’s shares opened at 420 koruna (€17.20) and closed at 537 koruna (€22), dramatically exceeding analyst expectations for a modest 10-15% first-day premium. The company raised €1.4 billion from institutional investors including BlackRock, Vanguard, and Norway’s sovereign wealth fund, proceeds earmarked for expanding ammunition production capacity across its factories in the Czech Republic, Slovakia, and Spain. Trading volumes reached 2.3 million shares by market close, signalling robust demand from both European and American institutional buyers.

The successful listing underscores the transformation of Europe’s defence industrial base. CSG, controlled by Czech billionaire Michal Strnad, manufactures artillery shells, small arms ammunition, and vehicle armour systems—products in desperate demand as European governments race to replenish stockpiles depleted by aid to Ukraine and prepare for sustained military spending. The company reported 2025 revenue of €3.8 billion, up 340% from 2021, with order books extending through 2028.

Europe’s Defence Rearmament Accelerates

CSG’s IPO capitalises on a structural shift in European security policy. Germany announced €83 billion in defence spending for 2026, pushing its military budget to 2.83% of GDP, with projections reaching 3.56% by 2029. The UK, France, Poland, and Nordic countries have similarly committed to multi-year rearmament programmes, collectively representing over €500 billion in procurement contracts through 2030. Defence stocks have become Europe’s best-performing sector, with companies like BAE Systems, Rheinmetall, and Thales posting 83% gains over two years.

Artillery ammunition has emerged as a critical bottleneck. European militaries burned through decades of stockpiles supporting Ukraine’s defence against Russia, exposing the continent’s anaemic production capacity. CSG and rivals are racing to build new factories—the Czech firm broke ground on a €400 million shell manufacturing plant in Pilsen in November 2025, scheduled to produce 200,000 155mm artillery rounds annually by 2027. European defence ministers have acknowledged the continent must quintuple ammunition output to meet NATO readiness standards.

Michal Strnad, CSG’s 58-year-old founder and majority shareholder, retained a 67% stake following the IPO. The reclusive billionaire built his empire acquiring state-owned Czech defence assets privatised after the Cold War’s end, consolidating ammunition, aerospace, and rail transport businesses into a vertically integrated conglomerate employing 14,000 across 11 countries. His net worth jumped €1.9 billion on the IPO’s first day, cementing his position as the Czech Republic’s wealthiest individual.

Investor Demand Reflects Permanent War Economy

Fund managers described CSG’s listing as a rare opportunity to gain exposure to Europe’s defence rearmament at scale. Unlike Western European defence contractors whose share prices already reflect the spending surge, CSG offered institutional investors an entry point into a rapidly expanding manufacturer with room for multiple expansion. The company’s price-to-earnings ratio of 18 remains below industry averages of 22-25, suggesting further upside potential if earnings growth continues.

The enthusiasm mirrors broader trends in defence investment. European defence stocks have surged as a permanent war economy takes shape, with governments signalling that elevated military spending will persist regardless of Ukraine war outcomes. NATO’s 2% GDP spending floor has effectively become a 3% minimum for frontline states, locking in demand for ammunition, vehicles, and air defence systems through the decade.

CSG’s order book provides visibility into this demand. The company holds contracts worth €11.2 billion, including multi-year agreements to supply 155mm shells to Germany, Poland, and the Netherlands. It also secured a €780 million contract to upgrade Czech infantry fighting vehicles and is bidding on a €2.3 billion Polish air defence procurement. Management projects 2026 revenue of €4.6 billion, representing 21% year-on-year growth.

Risks and Strategic Questions

Despite the successful debut, analysts identify risks. Ammunition manufacturing is capital-intensive and cyclical, vulnerable to shifts in government procurement priorities. Peace in Ukraine—however unlikely—could trigger demand collapse, leaving manufacturers with excess capacity and stranded assets. Environmental regulations also pose challenges; artillery shell production involves toxic chemicals and heavy metals, inviting scrutiny from EU regulators tightening industrial emissions standards.

CSG’s geographical concentration presents another concern. Two-thirds of its manufacturing capacity sits in the Czech Republic and Slovakia, creating supply chain vulnerabilities if regional instability spreads. The company plans to diversify production westward—it acquired a Spanish ammunition plant in 2024—but remains heavily exposed to Central European political and economic conditions.

The IPO also reflects Europe’s broader struggle to achieve strategic autonomy. While CSG’s success demonstrates the continent can scale defence production, European militaries still depend on American technology for advanced weapons systems, satellites, and cyber capabilities. The ammunition surge addresses one vulnerability but leaves deeper dependencies intact, a reality Mark Carney highlighted in his Davos warning about Europe’s subordinate status.

CSG’s market debut nevertheless signals a fundamental shift. European capital markets, long sceptical of defence investments, now embrace the sector as governments transform military spending from discretionary to structural. Whether this represents a sustainable investment thesis or a war-driven bubble remains the €8.2 billion question confronting CSG’s new shareholders.