Enersense extensive report: Profitable growth from lifecycle partnerships

Translation: Original published in Finnish on 10/13/2025 at 8:30 am EET.

We raise our target price for Enersense to EUR 4.7 (was EUR 3.7) reflecting positive forecast changes, but we lower our recommendation to Accumulate (was Buy) due to the share price increase. A little over a year ago, the company made a strategic shift, as a result of which it now focuses on established project and service businesses enabling energy transition and telecommunications connections. In these businesses, it aims for earnings growth with a strategy focused on lifecycle partnership. We remain confident in the sustainability of the earnings turnaround, supported by the Value Uplift efficiency program, and in relation to this, we see the stock's valuation as attractive.

From a clean slate towards lifecycle partnership

Following a strategic decision, the company sold and ramped down businesses that fell outside its strategy, a process it completed in summer 2025. Currently, the company's business is based on full lifecycle services in electricity and telecommunications networks, energy production, and the industrial energy transition, which it implements in Finland, the Baltic countries, and the Nordic countries. At the core of the current strategy, the company aims to develop into a lifecycle partner for its customers by offering customer-oriented solutions that combine services across its entire value chain. Overall, we see its strategic choices as sound, and we estimate that these choices have made the business easier to manage, profitably scalable to a larger size, and brought decision-making closer to business operations and customers. Through these measures, Enersense aims for 4-5% annual organic growth and an EBIT margin of over 5% by the end of 2028.

On the path to earnings growth through strategic measures

We estimate that the growth prospects for the target markets of the company's largest business units (Power and Energy Transition) are good, supported by the industrial energy transition, the need for renewable energy and transmission capacity construction, and maintenance investments in energy infrastructure. In contrast, we believe it is difficult to foresee clearer growth in the Connectivity market in the medium term. Thus, the annual growth target is not remarkably demanding, but on the other hand, achieving it will require an improvement in the industrial outlook, in our view. Profitability improvement, in turn, is pursued through strategic measures, which include the Value Uplift efficiency program (incl. pricing), changes in revenue structure (increase in the share of services), and operational leverage. We consider the path credible, even though there is still a clear way to go to reach the target (core businesses EBIT-% 2024: ~3%).

We have made positive forecast revisions for the growth of Power and Energy Transition, which also flowed through to the income statement. However, we expect the company to reach its indirect revenue target of around 400 MEUR only in 2029. Correspondingly, we expect margins to gradually improve and the EBIT margin to settle at 4.5% in 2028. Our adjusted EBITDA estimate for the current year's core businesses increased to 17.9 MEUR (was 17.6 MEUR, guidance 16-20 MEUR).

Expected return is still attractive

We remain confident in the sustainability of the turnaround in core business earnings in the coming years, supported by the Value Uplift program. Relative to this, we see upside in next year's EV-based multiples. This is also concretized by the fact that at our target price, next year's adjusted EV-based earnings multiples would be at the lower end of our accepted multiple ranges (EV/EBITDA ~5x, EV/EBIT ~8x). Our positive recommendation and the remaining upside in the valuation are also supported by all other methods we use (e.g. DCF ~EUR 5.4/share). In line with the overall picture, we consider the stock's risk-adjusted expected return attractive.