Relais extensive report: Value creation in the vehicle aftermarket

Translation: Original published in Finnish on 6/18/2025 at 7:00 pm EEST.

Relais' value creation model is based on owning and developing businesses and consolidating the vehicle aftermarket. Raw material for this, i.e. cash flow, is produced by its current businesses, which, according to our estimate, will grow in the long run roughly at the pace of economic growth. However, we expect the company to accelerate growth with acquisitions also in the future, and in light of historical evidence, we consider this the right choice from the perspective of value creation. We consider the current valuation of the stock moderate, whereas the risk level of the company’s defensive business is lower than average in our opinion. Thus, we consider the share’s risk/reward ratio attractive and reiterate our EUR 17.0 target price and Accumulate recommendation. 

Relais operates in the vehicle aftermarket

Relais Group persistently owns and develops companies that operate in the vehicle aftermarket and consolidates the aftermarket. Current Group companies are engaged in wholesale of spare parts, lighting and equipment and commercial vehicle repair and maintenance business in the Nordic and Baltic countries. During this decade, Relais has grown with the help of more than ten acquisitions, and we estimate faster organic growth than market growth. The company's financial target is to reach a comparable operating profit (pro forma EBITA) of 50 MEUR by the end of 2025. Reflecting this target, we expect the company to continue making acquisitions in the near future, for which its vast and rather fragmented target markets provide, in our view, good conditions.

The main drivers of profit growth are organic growth and allocating capital to acquisitions

Relais' target market grows mainly in line with the growth rate of the vehicle fleet, which we estimate is roughly in line with the economic growth rate in the medium and long term. Consequently, reflecting revenue growth in line with market growth, the acquisitions already announced and the commendable level of operational efficiency achieved, we expect earnings growth to average around 9% in the coming years (2024-2027). Relais' financial position, business cash flow and the possibility of using its own share as a means of payment enable the continuation of inorganic growth, but the company has also announced its intention to strengthen its capital structure with equity financing. Reflecting on the Group's business model and strategic choices, we believe that the return on capital allocation achieved is the key driver of the stock's long-term return expectation. The key risks for the stock are also related to the success of capital allocation but considering the quality and valuation levels of recent acquisitions, we believe that the Relais’ track record of acquisition-driven growth is good.

We believe the risk/reward ratio is attractive

According to our forecasts, the adjusted P/E ratios for 2025 and 2026 are about 10-9x, and the corresponding adjusted EV/EBITA multiples are 11x and 9x. This year's valuation multiples do not fully reflect the recent acquisitions, but in our view, the more relevant next year's multiples are moderate for Relais' current businesses. In relative terms, Relais is valued largely in line with the peer companies operating similar businesses, while relative to the peer group of serial consolidators the share is valued at a clear discount. In our opinion, Relais' justified valuation level is somewhere in between these peer groups, so the valuation of the share is attractive in absolute and relative terms. This valuation is also supported by the cash flow model at EUR 16.6, which is above the current share price. Reflecting this valuation, Relais' historical evidence of capital allocation, and the business risk profile, we consider the stock's risk-return ratio attractive.