Defense stocks soar as Israel’s new IPOs split into winners and losers
DSIT and Smart Shooter have gained more than 50% since going public, while Prodalim, Urban Brand and Gabay Group have lost between 18% and 25.7%.
Since the beginning of the year, with five months still remaining, 20 companies have completed initial public offerings on the Tel Aviv Stock Exchange, raising a combined NIS 7.7 billion ($2.57 billion). That represents a sharp increase compared with all of 2025, when 21 companies raised NIS 5.7 billion ($1.9 billion) through IPOs.
For investors, however, the picture is far less rosy. While defense and infrastructure companies have posted gains of tens of percent, nine of the 19 stocks that have begun trading are currently below their offering prices. The wide gaps between the new issuers reflect a shift in investor preferences since the outbreak of the war with Iran, as well as growing caution toward residential real estate and industries that have not benefited from the security-driven surge in spending.
An examination of the performance of the newly listed companies shows that, despite most of them being relatively mature and established businesses, investors have been highly selective in rewarding them. Of the 19 stocks already trading, excluding Avisror, nine have generated negative returns since their first day of trading. Only seven have outperformed the benchmark Tel Aviv-125 index since the beginning of the year.
Five of the new stocks have suffered double-digit declines, ranging from 14.8% to 25.7%, while at the other end of the spectrum, six have risen between 21.7% and 52%.
The three standout performers among the new issuers are defense companies DSIT and Smart Shooter, which went public in March and have since risen 52% and 50.5%, respectively, and infrastructure and construction company Minrav, which also completed its IPO in March and has gained 38.7%.
DSIT, controlled by Rafael with a 40% stake, develops underwater security systems based on electronic components for navies and energy companies, as well as various assemblies for defense systems. The company raised NIS 52 million ($17.3 million) at a post-money valuation of NIS 249 million ($83 million). Following the rise in its stock, its market value has reached NIS 379 million ($126 million).
Smart Shooter, founded by former Rafael employees, develops, manufactures and markets smart electro-optical sights. The company completed its IPO a week before DSIT, raising NIS 260 million ($86.7 million) at a valuation of NIS 841 million ($280 million). Of that amount, NIS 60 million ($20 million) was raised through a concurrent offer for sale by existing shareholders. Smart Shooter's market value has since risen to NIS 1.3 billion ($433 million).
The performance of the two companies stands out against the recent weakness of larger, more established defense stocks. Since Smart Shooter began trading, Elbit Systems, with a market value of NIS 119 billion ($39.7 billion), NextVision, valued at NIS 21 billion ($7 billion), and Aryt, valued at NIS 2.6 billion ($867 million), have fallen 4.2%, 36.7% and 58.5%, respectively. Over the same period, the Tel Aviv Defense Index has declined 29.5%.
Minrav, which completed its IPO at the end of March, raised NIS 360 million ($120 million) at a post-money valuation of NIS 1.5 billion ($500 million). The company operates across engineering, infrastructure and real estate, carrying out construction projects for residential, office, commercial and industrial buildings for both the private and public sectors, as well as infrastructure projects for the public sector.
“With Minrav, the story is relatively simple. The entire infrastructure sector has performed well in recent months due to expectations for huge tenders for the metro project and other significant infrastructure and construction projects that are expected to be launched in the near future,” a senior official at an institutional investment house that follows the company told Calcalist.
While DSIT, Smart Shooter and Minrav have stood out on the upside, Prodalim, controlled by the family of former Shin Bet chief Ronen Bar, sits at the bottom of the new-issuers table. Its stock has fallen 25.7% since its IPO in February.
It is followed by two residential real estate companies: Urban Brand, which went public in January and has fallen 21.8%, and Gabay Group, which has declined 18% since its March IPO.
Prodalim, which produces natural solutions for the food and beverage industry, raised NIS 369 million ($123 million) at the end of February at a valuation of NIS 2.4 billion ($800 million).
Market sources attributed the decline partly to the company's business mix. Its specialty ingredients division, which develops and manufactures natural ingredients with added value for the food, beverage, flavor and fragrance and natural additives industries, is relatively profitable and has continued to grow. But it accounted for only 24% of the company's revenue in the second quarter.
Its juice solutions business remains the company's main source of revenue but has struggled to grow, while its profitability has also been affected.
“The core business there has not grown, and the market looking at Prodalim's performance wants to see results in this area now. It is less willing to price in dreams and plans for future growth,” a senior official at an institutional investment house said.
Another institutional source linked Prodalim's performance to that of Turpaz, a company operating in a similar field.
“Prodalim is linked in the market to Turpaz, and it should be noted that Turpaz's stock has also weakened in recent months. It has fallen 14% since the Prodalim IPO. So investors who exit one will also exit the other,” the source said.
Other market sources attributed at least part of Prodalim's decline to the timing of its IPO, which came only days before the outbreak of the war with Iran and the resulting market turbulence.
The weakness in residential real estate is more straightforward.
“Among residential real estate developers, the reasons for the declines are clear,” the senior institutional investor said. “We have been seeing a slowdown and difficulty in sales for a long time. Beyond that, concerns about the crisis in high-tech and its potential impact on job security are adding pressure to people's ability and willingness to buy apartments in the future.”
Urban Brand and Gabay Group are not alone. With the exception of Almadev Real, which operates in North America, the other residential real estate companies that went public this year, Tidhar, Rami Levy Real Estate and BST, have also suffered declines.
Urban Brand, which focuses on urban renewal and went public at a valuation of just NIS 96 million ($32 million), illustrates another dynamic affecting smaller companies.
“There is a disadvantage here for the small,” one institutional investor said. “When the entire market goes down, investors are less stressed about the large companies and more stressed about the small ones.”
The result is a sharply divided IPO market. The flood of new listings has generated significantly more capital than last year's IPO market, but the performance of the stocks shows that investors are not rewarding companies simply for reaching the public market. In a market increasingly shaped by war, defense spending and expectations for infrastructure investment, companies seen as beneficiaries of those trends are attracting capital, while businesses exposed to weaker consumer demand, real estate and economic uncertainty are facing a much tougher test.
