After a 22% drop in stock: Defense company Bagira publishes reports for the first time

Bagira, a military training and simulation systems company controlled by the Mizrahi family, published its first financial report since becoming a public company in June, concluding the first half of 2026 with a jump of about 51% in revenue, to about 163 million shekels, and a growth of about 44% in net profit, to about 54 million shekels.

Despite this, since its IPO on the Tel Aviv Stock Exchange, the stock has lost about 22.5% of its value, and the company is currently trading at a valuation of about 2.6 billion shekels.

Most of the growth came from Europe, where revenue jumped more than fourfold, to about 94 million shekels compared to about 23 million shekels last year. The most prominent area of activity was field training systems, which surged by about 181% to about 84 million shekels.

Gross profitability improved to about 64% of revenue, compared to about 57% in the corresponding period, which fueled a jump of about 64% in operating profit (to about 75 million shekels) and about 79% in adjusted EBITDA (to about 95 million shekels). Cash flow from current operations more than tripled, to about 75 million shekels. The company ends the half-year with about 382 million shekels in cash, with no financial debt, and reaffirms a revenue forecast of 340 to 380 million shekels for all of 2026.

The IPO of Bagira, led by IBI Underwriting and Leader Underwriting, took place in June at a pre-money valuation of about 3.3 billion shekels, already much lower than the early market estimates, which ranged between 4.5 and 5 billion shekels.

The company raised about 855 million shekels in exchange for about 25% of its shares, but only about 200 million shekels entered its coffers, while about 655 million shekels flowed into the pockets of the Mizrahi family members through an offer for sale.

Leading savings institutions participated in the IPO, including Meitav, Phoenix, Clal, Harel, and Migdal, as well as the veteran pension funds Amitim. Since then, against the backdrop of high expectations and full pricing, the price has eroded by about 22.5%.

The figure that requires monitoring is the order backlog, which shrank to about 519 million shekels, compared to about 538 million shekels last year and about 634 million shekels at the end of 2025. The company attributes this to timing gaps, as defense procurement tends to concentrate in the second half of the year, as well as to multi-year contracts that renew cyclically and to the strengthening of the shekel, which also hurt financing expenses (about 12 million shekels compared to about 2 million last year).

At Bagira, they estimate that by the annual report, the backlog will expand and support growth. The first support for this came in July, with the signing of a 15-year maintenance and operation contract with a NATO member state in Europe, in the amount of about 9 million euros.

Since large institutional investors entered the IPO, the pension and provident funds of the general public are now exposed to Bagira, and the decline in the stock is already being recorded in the savers' portfolios. On the other hand, the company benefits from a European defense procurement wave, a balance sheet free of debt, and strong cash flow, and already distributed a dividend of about 100 million shekels in July. The central question for the future is whether the growth rate will retrospectively justify the pricing set in the IPO.

Yaron Mizrahi, CEO of Bagira, stated:

"We are publishing financial reports for the first time as a public company and presenting significant growth in revenue, profits, and cash flow from current operations. The results reflect the continued business expansion of Bagira in international markets, led by Europe. This is in accordance with the strategic focus on accelerating expansion outside Israel's borders. The IPO funds give us significant financial flexibility to accelerate business development, expand operations in existing markets, enter new markets, and examine opportunities for acquisitions and mergers. We continue to work to realize Bagira's growth potential and establish its position as a leading player in the global defense training and simulation systems market."