DE40: DAX loses slightly 📌RENK Group surges 7% leading gains on German stock market

• Mixed sentiment on the German stock market; RENK Group leads the gains
• Sentiment on the German stock exchange remains mixed: the DE40 index is down slightly but continues to hold above the 24,000-point mark.
• Shares of Hensoldt and RENK Group — up 130% and 260% year-to-date respectively — are leading the gains.
• Meanwhile, ElringKlinger, an automotive parts manufacturer, is down more than 6%.

European markets overall are showing mixed sentiment today, as investors closely watch Wall Street, where volatility has subsided and major indices are losing steam after recent rallies. Nonetheless, it’s important to note that the German DAX remains in a consolidation phase near all-time highs, and has gained nearly 20% year-to-date despite a sharp 15% drop in April.

Source: xStation5

RENK Group riding the uptrend

RENK Group AG, a German supplier of propulsion systems and components for both civilian and defense sectors, is rallying after last week’s announcement of a twofold increase in order intake and a record-high order backlog. In Q1 2025, the company joined the mDAX index, and analysts at JP Morgan upgraded their rating for the stock.

• In Q1 2025, RENK reported a 163.5% increase in order intake, reaching €549 million, up from €208 million a year earlier. The order backlog hit €5.5 billion, and the company's market capitalization is now close to €7 billion.
• Revenue rose by 14.7% to €273 million, while adjusted EBIT climbed to €38 million, reflecting a 38% year-over-year increase. The EBIT margin improved from 11.7% to 14.1%. The defense sector is now clearly the company’s primary growth engine.
• In the Vehicle Mobility Solutions (VMS) segment, revenue rose 28.1% to €172 million, and adjusted EBIT surged 46.6% to €29 million, translating into a 16.6% EBIT margin.
• Order intake skyrocketed by 404.2% to €397 million, driven by two major U.S. Army contracts worth over $150 million, related to transmission systems for the BFV and AMPV platforms.
• At the same time, the Marine & Industry segment posted a 6.9% decline in revenue to €73 million, largely due to project delays to later quarters. Despite that, EBIT in this segment rose 54.7% to €7 million, with the margin improving to 10.2%. Order intake increased 24.9%, supported by major international marine contracts.
• The Slide Bearings segment performed in line with expectations, with revenue up 6.8% to €31 million and EBIT growing 9.3% to €5 million.

The EBIT margin improved to 17.3%, while order intake slipped slightly by 5.2% to €37 million, having no significant impact on the overall segment performance. RENK expects full-year revenue to reach €1.3 billion, implying a price-to-sales multiple of approximately 6x, and an adjusted EBIT of €210–235 million. With a market cap near €7 billion, the valuation is becoming increasingly demanding in terms of price-to-earnings.

In the longer term, the company aims to achieve €2 billion in revenue by 2028 and €300 million in EBIT by 2027.
It emphasized that these forecasts are based on the current high order backlog and operational strength, excluding potential upside from increased EU defense spending.

RENK Group Shares (R3NK.DE)

Source: xStation5