The Russia-Ukraine war and the Swords of Iron war have led to an unprecedented share price rise for defense companies, which have recorded phenomenal returns in the hundreds and sometimes even thousands of percentage points.
Among the beneficiaries of this defense market boom: the Mizrachi family, controlling shareholders of military simulator company Bagira Systems, which went public on the Tel Aviv Stock Exchange in early June. With two decades worth of development and a post-money valuation of some NIS 3.4 billion, the IPO was the largest ever by a defense company on the local market.
In his first post-IPO interview with "Globes " Bagira Systems CEO Yaron Mizrachi, discusses the efforts made to keep the company private, despite interest from various parties, and recent internal changes that led to the decision to go public.
The interview with Mizrachi was conducted at the company's state-of-the-art offices on the outskirts of Modi'in. Bagira moved there about two years ago after a long journey that began in a private house in Rosh HaAyin. The lowest office floor is a dimly-lit below-ground room that houses the various Bagira simulators developed over the years. "If you haven’t seen it for yourself, you can’t understand it. It’s like the difference between watching a soccer game and reading about it," Mizrachi says with a smile.
Indeed, the various simulators deployed around the room simulate battlefield conditions in the clearest and most accurate way, with the equipment used by fighters and the threats they face. "We found that a training session is memorable if it has a strong emotional effect, so we use large screens, smoke and explosions. It's something that becomes etched in your memory for a long time. Everything we do is aimed at giving the fighter and commander on the front line the highest possible level of operational readiness, and we build it from there," explains Mizrachi.
Yaron's brother, Sagi Mizrachi, who serves as vice chairman and chief business development officer, joins the conversation. He emphasizes that this is not a classic family business, given that their other brothers and sisters are not involved in the company. "When we started the company, we made sure that issue of family wouldn’t be the main thing. Our children don't work for the company, and our conduct is very corporate and not family-focused," says Sagi. "Within our family there’s a lot of trust and strength, we complement each other, and everyone has their own approach. True, we have arguments, as in like every workplace and every family, but I think it's a good thing."
"Sometimes, the coin is under the streetlight"
For more than two decades, Bagira has engaged in the development, sale, and operation of training and simulation systems for security forces in 22 countries. Among other things, the company, which employs about 450 employees, has developed systems designed for out-in-the-field tactical training. Among its most prominent products in the field is the MAGNET tactical engagement simulation system, which has an electronic cartridge and a smart sensor system, designed to simulate Force-on-Force combat in the field without the use of live ammunition. It also offers GORILLA, a portable training console that enables the operation of several Bagira simulation programs.
In addition, Bagira operates "Point-of-Need" tactical training solutions, installed at customer bases, which facilitate the training of large numbers of fighters in a variety of disciplines, such as Krav Maga, firing ranges, and urban combat. It also employs coaches who offer virtual-reality (VR) training in a variety of tasks, for example, a training system for operating Spike ("Gil") anti-tank guided missile launchers, combining the simulation engine with real Spike launchers to facilitate VR training in simulated combat environments using actual equipment, while reducing resource requirements.
In recent years, the company has benefited from growing demand for its field training products, which accounted for more than half (51%) of its revenue in the first half of this year, compared with 27% last year. "When I look at our growth prospects, I see enormous potential in field-based training systems. We’re entering a rapidly growing market, and we have a clear competitive advantage over existing solutions," says Yaron Mizrachi.
He adds that the need for field training became more pressing after the outbreak of the Swords of Iron war. "Maj. Gen. (res.) Yoel Strick joined the company last year. He raised the question of how to prevent the next Yom Kippur War or October 7. Sometimes, the coin is under the streetlight. Together, we came to the realization that if you want to prevent a war, you have to train continuously." Strick is a former commander of IDF Northern Command and commander of the Ground Forces. He is now General Manager of Bagira Israel.
Mizrachi notes that ground forces around the world have traditionally held training exercises, at best, once every three months. "We realized that training needs to be decentralized, brought directly to frontline units, and made possible on a daily basis. When you don’t train, you become complacent, even during wartime. That’s when accidents happen, and the enemy notices. Fortunately, we’re seeing this understanding take hold in the IDF and other militaries. With these systems, it’s possible to scale up from tens of thousands of training days a year to millions, (in terms of the number of soldiers), achieving an entirely different level of operational readiness. We’re not there yet, but we will be."
The growing demand for Bagira’s products is reflected in the company's financials for the first half of this year. Revenue of NIS 163 million represents growth of about 51% compared with the corresponding period in 2025, attributable mainly to a four-fold growth in revenue from Europe, mainly for field training systems. The bottom line is that the company recorded about 45% growth in net profit, to NIS 54 million, despite the negative impact of one-time expenses related to the IPO.
On the minus side, the company's backlog of orders at the end of the half year was NIS 519 million, about 18% lower than at the end of 2025, and 3.5% lower compared with the corresponding period. The company attributed the decline to a large order received in 2025, a timing gap between the pace of deliveries and the receipt of new orders, and the negative impact of the shekel’s appreciation.
"I wake up every day concerned. I never take anything for granted, because I always need to bring in more orders and improve production," he says. "But remember that we’re heavily affected by recurring revenue. Toward the end of 2025, we received a fairly large order, and that revenue is now beginning to taper off. But orders of this kind are usually renewed several times, with each subsequent round becoming larger. Our current backlog supports our continued growth, in any case, and it will grow, and we’ll see that towards the end of the year."
"The first ripples of a coming tsunami"
Yaron Mizrachi estimates the company will continue to rely on increasing security and defense needs in the coming years, with a forecast of high rate of continued growth in the coming years.
Indeed, Bagira expects to end 2026 on NIS 340-380 million revenue, representing growth of 34% compared with 2025. Accordingly, the board of directors has set an annual revenue growth target of 25%-35% for 2027 to 2030, with no significant change in gross and operating profit rates.
However, although the company presents strong results and optimistic forecasts, it appears local investors are not yet convinced, with Bagira's share down about 10% since the IPO, to a market cap of about NIS 3 billion. "The market experiences trends and the defense sector has declined significantly since we went public. Still, we’ve fallen less than many other stocks in the sector.
In any case, he believes the market in which the company operates is far from reaching its full potential. "The defense cycle is a long one. A tsunami is coming, and so far, we’ve only felt the first ripples. Our main task now is to prepare for it properly. We continue to make sales, develop the next iterations of our systems, and improve our products. NATO countries have committed to gradually increasing defense spending to 5% of GDP, with 1.5% allocated to critical infrastructure. We fall into both categories, because our systems are also considered critical training infrastructure."
Sagi adds, "Many European countries are considering the question of their reserve units and how to train this manpower. They look at Ukraine, and they understand that a regular army is not enough, so everyone is going to establish reserve systems. We meet with customers and feel their need to train fighters and train them professionally. When they are exposed to our solutions, they realize that if they want to train a lot of fighters who need to be recruited quickly, they need to come with convenient, mobile, effective systems wherever people are, in their communities or at the front - anywhere."
So, you’re not worried about the decline in the level of conflict?
Yaron: "On the contrary, I think that when the conflicts calm down a bit, armies will be mobilized and these needs will be reinforced. When conflicts erupt, unprepared armies first tend is to recruit manpower and purchase ammunition and platforms. But now that you've recruited 150,000 fighters, how do you maintain their competence, and how will you convert civilians to reserve forces in an emergency?"
"Creating our own product"
The family officially established Bagira in 2004, but according to the brothers, the seeds were planted far earlier. As befits a family business, the story goes back generations. "My mother's parents lived on Kibbutz Ashdot Yaakov, and in the summers our parents would park us there. Anything we did, my grandmother would call 'a real business.' This was at a time when your value was measured by what you did in the kibbutz industry. You had to be productive. I got it burned in my brain that we could do something productive with value, and build 'a real business,'" Yaron recalls.
The security aspect came from their grandfather on their father’s side. "He was was part of Alexander Zaid's Hashomer defense organization, we used to go around with him when he was carrying a pistol. It was like the Wild West. So, we were very close to the defense world from an early age; it was in our bones," Yaron recalls. "That background and passion led us to establish Bagira, combined, of course, with my father’s extensive experience (Brigadier General (res.) Aryeh (Arie) Mizrachi), who was the IDF Commander of the Artillery Corps and former chairman of Israel Military Industries. These came together with the knowledge and experience Sagi gained at the Wharton School and as an investment banker, along with my own passion for creating."
When the family decided to establish Bagira, it initially represented and operated simulation systems manufactured by non-Israeli companies. "We battled endlessly with the parties involved, until at some point we came to the conclusion, about ten years ago, that we needed our own technological product, in which we controlled the software and hardware down to the last detail. We had an American partner who during negotiations said to us, 'You don’t write a line of code and you don’t make anything, so why should you get so much?' We took what she said to heart, and we thank her for that to this day."
The Mizrachi family chose to name the company after the hero panther in Kipling’s "The Jungle Book". "On the one hand, he is very strong, and on the other hand, he helps everyone. The panther’s power in his jungle habitat suited us, as well as the fact that he did his work behind the scenes and not in front," Mizrachi explains. "That's how we see ourselves, when the main thing is the end user, who benefits from the services we provide."
Going public - not a foregone conclusion
Early last June, the company hit a significant milestone when it issued shares on the Tel Aviv Stock Exchange at a NIS 3.4 billion valuation. As part of the process, family members, father Arie and sons Yaron and Sagi - the company's de facto management, sold some NIS 655 million in shares, and were left with shares currently valued at about NIS 2.2 billion.
"We preferred to remain private, despite receiving offers, because we believed in what we had built and wanted to grow it," says Yaron Mizrachi. "The idea of going public was two years in the making, because we considered carefully how to take the next big step without becoming tied to a defense company that manufactures specific types of weapons. We concluded this was the right move at the right time. From the customers’ perspective, we needed to make the transition to a publicly traded company, both in terms of scale and transparency. At the same time, it brings capital into the company and opens new growth opportunities, so we decided the time was right to go for it."
Looking ahead, the brothers see two key growth drivers to support the company's operations. "The State of Israel is a major growth engine for us, although we expect its share of our sales to decline over time," they say. "Israel continues to be a source of innovation and expertise, and the knowledge accumulated here is immense. We see ourselves on a par with the industry’s three giants ([Israel Aerospace Industries, Elbit Systems, and Rafael - E.G.) because we are very strong in our niche. That gives us an advantage when it comes to international partnerships, where training is our strongest asset."
The second engine is entry into Europe. "We are firmly rooted within NATO, with a local production factory in the Czech Republic," they say. "Europe operates on a 'friends bring friends' method, where if it suits one country, then the neighboring country will want the same thing. In the end, their armies train together and the standards are identical. It's a beautiful growth engine that will open a lot of doors for us in Europe and around the world, because they see our capabilities and recommend us to others."
Finally, Sagi notes mergers and acquisitions as another area of focus, with part of the IPO proceeds expected to be allocated to this purpose. "We've nearly doubled our efforts in this area, attending many more trade shows and stepping up promotional work. We're looking at acquiring a substantial company that would open a relevant market for us, either one that already has a foothold and could shorten our path to market, or one that brings strong technological capabilities and products. We're currently evaluating several companies at different stages, but we’re not in a rush. We want to make sure we get it right."
Published by Globes, Israel business news - en.globes.co.il - on October 11, 2026.
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