Translation: Original published in Finnish on 04/28/2026 at 08:00 am EEST

Source: Inderes

We reiterate our Buy recommendation for Enersense but lower our target price to EUR 4.9 (was 5.2) ahead of the company's Q1 result to be published on May 7. We estimate that the company's market situation has remained good in its key market segments. However, in our view, the company's revenue development will be more heavily weighted towards H2, and in light of this, we have made timing-related adjustments to our current year's estimates. We also estimate that cost inflation will erode the company's profitability, which has led us to make slight negative revisions to our earnings estimates for the coming years. That said, we consider the expected return based on earnings growth in the coming years to be very attractive and the recent share price decline unwarranted.

The start of the year was slowed down by weather conditions and authorization processes

In this report, we revised our Q1 operational estimates downwards, as we understand that the early-year performance was hampered by both weather conditions and the authorization processes for certain projects. However, the full-year performance is supported by a strong order book at the end of 2025 (392 MEUR), and in our view, a slight delay in project starts will not materially affect full-year figures. However, we assume that revenue and earnings will be weighted more heavily towards the second half of the year than our previous expectations. We now estimate Enersense's Q1 revenue to have been 61.4 MEUR (was 68.6 MEUR), representing a comparable decrease of approximately 5% from the comparison period (vs.  Q1'25 core business revenue of 64.7 MEUR). We expect that lower revenue will also be reflected in the H1 earnings performance, and we forecast the company's adjusted EBITDA to have been 0.9 MEUR (was 2.2 MEUR). However, we expect the Group's reported EBITDA to have fallen to -0.7 MEUR due to costs related to the Value Uplift efficiency program.

Our guidelines for the coming years' estimates remain unchanged

Enersense has guided that its adjusted EBITDA for 2026 will be 19-23 MEUR. We expect this guidance to be reiterated in connection with the report. The timing revisions we made did not have a material impact on our 2026 revenue estimate, and we expect revenue to grow to 326 MEUR (was 329 MEUR). We estimate that inflationary pressures caused by the situation in the Middle East will negatively impact costs, and that passing these on to sales prices will take some time. Reflecting negative cost revisions, our adjusted EBITDA estimate for 2026 decreased to 20.6 MEUR (was 21.8 MEUR). We also made slight downward revisions for the coming years, which led to a 4-5% decrease in our operational earnings estimates. We expect operational earnings growth to remain high in 2027-2028 (adj. EBIT growth of 10-20% p.a.), supported by favorable market outlooks (incl. data center investments), strategic measures, and Value Uplift.

Valuation has turned very low

With our estimates, we consider 2026 EV-based multiples (hybrid loan accounted for as debt) quite moderate (2026e EV/EBIT 7x, EV/EBITDA 4x) and below the levels we find neutral (EV/EBIT 8x-12x, EV/EBITDA 5x-7x). Looking ahead to 2027, the multiples fall to very low levels (2027e EV/EBIT 5x, EV/EBITDA 3x), and we see clear upside in the earnings-based valuation. We believe the valuation is weighed down, partly justifiably, by several recent non-recurring items related to restructuring and strategy, which have led to very volatile reported earnings development for the company. At the same time, we feel, this has somewhat overshadowed the measures taken on the operational side and the favorable underlying market outlook. As the earnings turnaround progresses roughly  as we expect and non-recurring items decrease, we see clear upside drivers for the valuation. Our view of the stock's significant upside is also supported by other methods we use (e.g. DCF EUR ~5.8/share).