Relais Q2'25: The acceleration lane is still open

Translation: Original published in Finnish on 8/15/2025 at 7:30 am EEST.

Relais' Q2 performance was operationally quite in line with our expectations, and the sluggish market situation did not significantly destabilize the company. Against this backdrop, we have made few changes to our forecasts, as our expectations of a gradual improvement in the operating environment aligned with management's comments. Therefore, we are maintaining our target price of EUR 18.5 or our Accumulate recommendation.

Operationally, a quarter largely in line with expectations

Relais’ Q2 revenue grew by 12% year-on-year to nearly 83 MEUR, which slightly exceeded our estimate of just under 80 MEUR. The slight organic decline in revenue (-2%) was largely in line with our expectations, as anticipated weaker demand eroded demand relative to the strong level in the comparison period. However, this was more than offset by the growth spurt brought about by acquisitions, which had a greater impact than predicted, causing an overshoot of our estimates. The operating result (EBITA) for Q2, adjusted for amortization of acquisitions, was exactly in line with our forecast at 7.2 MEUR. Overall, operationally speaking, the quarter was steadily reliable for Relais, as usual. The fact that earnings per share fell to EUR 0.08, short of our forecast of EUR 0.20, does not change this overall picture, as this was largely due to losses related to FX rate fluctuations, a substantial portion of which has no impact on cash flow.

Limited room for maneuver in terms of balance sheet

At the end of Q2’25, Relais’ net debt was 227 MEUR (incl. IFRS 16 liabilities), corresponding to a net debt/EBITDA ratio of 4.4x (2.5x excluding lease liabilities). Considering this, the company's current financing agreements, and its most recent acquisitions, we estimate that Relais has limited room for maneuver in terms of capital allocation. However, the company has announced plans to refinance the bridge financing obtained for the TVH acquisition with equity-like or equity capital market financing in the near future. Given this and the defensive nature of the business, we believe that the financial position is on a very stable footing. According to our estimates, the amount of refinancing for the bridge financing facility will also largely determine the amount of funds available for inorganic growth in the short and medium term.

We saw no reason for significant estimate changes

We have not made any significant changes to our operational estimates since the Q2 report, which was in line with our expectations. However, we slightly increased our net financing costs forecast, reflecting the slightly higher level of interest expense we anticipate. Against this backdrop, our operating profit forecasts rose by one percent, while our earnings per share forecasts for the coming years fell by the same amount.

We believe there is upside in the valuation

According to our forecasts, the adjusted P/E ratios for 2025-2026 are about 13-11x, and the corresponding adjusted EV/EBITA multiples are 13x and 10x. In our view, the valuation multiples for next year, which fully reflect the acquisitions made and are therefore more relevant, are quite reasonable and have upside, considering Relais' operational businesses and track record in capital allocation. Relatively, Relais is valued roughly in line with companies engaged in similar operational businesses, whereas compared to serial acquirers, the valuation is at a significant discount. In our opinion, Relais' justified valuation lies somewhere between these two peer groups. Thus, when viewed through the lens of peer valuation, we believe that the current valuation level does not reflect value created through capital allocation. Given the company's track record, we believe it is reasonable to rely on its continuation, so we find the risk-reward ratio of the stock is attractive.