July 17th, 2025 | 07:10 CEST
Armament stocks make a splash! RENK, DroneShield, Volatus Aerospace - Drones instead of tanks?
A major shake-up in the defense industry! KNDS is set to go public later this year, and the German federal government may participate in the IPO, which would also result in an indirect stake in RENK. KNDS has a stake in the gearbox specialist, and the two companies are jointly building the Leopard 2, among other things. But are tanks still relevant? The war in Ukraine has at least exposed their vulnerability and ushered in the age of drones. Volatus Aerospace and DroneShield are benefiting from this, with their shares having multiplied in recent months. However, more and more orders are now coming in from NATO. Revenue and profits are likely to explode in the coming years.
time to read: 4 minutes
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Author:
Fabian Lorenz
ISIN:
RENK AG O.N. | DE000RENK730 , DRONESHIELD LTD | AU000000DRO2 , VOLATUS AEROSPACE INC | CA92865M1023
Table of contents:
Author
Fabian Lorenz
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
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NATO member bets on Volatus Aerospace
Volatus Aerospace has been clearly committed to drones since the Company was founded six years ago. Since then, it has grown organically and acquired 18 companies to bundle new skills and technologies. Today, the Canadian company specializes in drone surveillance and transportation, offering its services worldwide. To achieve this, it uses a wide variety of drones from various manufacturers.
In recent weeks, Volatus has caused a stir with orders from NATO. This has catapulted the stock onto the radar of investors worldwide. Since the beginning of June, the stock has gained a substantial 350%.
In an interview with Lyndsay Malchuk of Stockhouse Media in June, Volatus CEO Glen Lynch had already hinted at major upcoming contracts. Interestingly, he emphasized that large orders were not yet in the pipeline. Likewise, analysts at Ventum Capital Markets noted in their latest report that their estimates are conservative. They forecast revenue of CAD 72.5 million for 2026 and over CAD 83 million for 2027. However, in recent months, the first NATO orders have been secured. It is therefore likely that the estimates will be revised upward soon.
Volatus Aerospace recently announced that it had delivered a fleet of tactical drone systems for reconnaissance and surveillance to a partner in a NATO member country. The order was valued at approximately USD 1.85 million. The lightweight drones are equipped with both thermal imaging and visual sensors, making them suitable for use in all weather conditions and at any time.
Glen Lynch: "This delivery underscores our ability to provide innovative and mission-ready technologies for our allies' defense operations. As global conflicts evolve, so does the need for agile, battle-tested ISR capabilities." Volatus had previously received a contract for training in drone operations and sensor usage as part of aerial reconnaissance programs.
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DroneShield: Investing in Europe
With the boom in drones, countermeasures are naturally becoming increasingly important. And that is precisely what DroneShield focuses on. The Australian company offers AI-powered hardware and software solutions for detecting, tracking, and countering drones. The stock is one of the year's high flyers. Since the beginning of the year, the share price has risen by 380%. The market capitalization now stands at AUD 3.38 billion. To put this into perspective, the Company generated revenue of USD 57.5 million in 2024 as a whole. However, the Company anticipates rapid growth, with a particular focus on Europe.
At the end of June, DroneShield reported three orders from its private European reseller worth a total of USD 61.6 million. The customer resells the products to a European military customer. The order includes handheld drone detection and defense systems, and related accessories.
DroneShield anticipates receiving significantly more orders from Europe. The region is currently one of DroneShield's largest geographical segments, with a volume of over AUD 1.1 billion across 55 active pipeline projects. To support this growth, the Company plans to establish a center of excellence focusing on manufacturing and assembly, research and development, drone testing, and training. The aim is for at least 65% of orders received in Europe to be produced locally in the future. The Australian company's European headquarters are currently located in the Netherlands.
DroneShield CEO Oleg Vornik commented: "Building a robust European supply chain to support equipment sold in the region will strengthen sovereign capabilities. At the same time, our experienced Australian software development team will continue to deliver important updates to address new threats both in Ukraine and globally."
RENK: Is the federal government indirectly getting involved?
A bombshell in the European defense sector! According to media reports, the German government is considering investing in the German-French defense company KNDS. Among other things, KNDS manufactures the Leopard 2 tank. The Company was formed in 2015 through the merger of the German company Krauss-Maffei Wegmann and the French state-owned company Nexter. The background to the possible state participation is that KNDS is expected to go public later this year, and the Bode and Braunbehrens families, as major shareholders, are likely to reduce their holdings. By purchasing the shares, the German federal government could secure direct influence over one of Europe's most strategically important defense platforms.
Such a move would have far-reaching consequences not only for KNDS itself, but also for its partners and suppliers. RENK, for example, is already partly owned by KNDS and supplies gearboxes for the Leopard 2 tank, among other things. If the Federal Republic were to acquire a stake in KNDS, it would also indirectly hold a stake in RENK. This could open up new opportunities, but it would also require coordination between industry, the military, and politics. Rheinmetall, currently Germany's largest defense contractor and involved in several joint projects with KNDS, is also likely to feel the new dynamic. The state could become a counterweight in the market through KNDS, with possible implications for contract awards, market shares, and political influence in the industry.
Operations are running smoothly for all defense companies. RENK yesterday announced an order for the delivery of a further 42 HSWL-256B transmissions for the AJAX infantry fighting vehicle to Latvia. The Baltic country had already ordered 42 units at the beginning of July and has now exercised its option to increase the order to 84 transmissions. The transmissions will be produced at the Augsburg site and are scheduled for delivery next year. RENK's HSWL-256B transmission is already in service in British Army vehicles. It is primarily used in the 35 to 45 tonne weight class.
Tanks will likely continue to form the backbone of any army, benefiting companies like Rheinmetall, KNDS, and RENK. However, drones have become an integral part of modern defense strategies, and NATO appears to have significant catching up to do in this area. The potential for DroneShield and Volatus is correspondingly high. And perhaps there will soon be one or two acquisitions in this area. Volatus currently appears to be more attractively valued.
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