Relais' Q2 result fell short of our estimates despite stronger-than-expected revenue growth. However, there were factors that we do not believe will have a long-lasting impact. Against this background, we have not made any major changes to our medium-term estimates. Therefore, we also reiterate our target price of EUR 17.0. The stock's valuation is moderate based on our forecasts, and thus we maintain our Accumulate recommendation. The CEO's Q2 interview (in English) can be viewed via this link.

Good organic growth, but weak profitability

Relais' Q2 revenue grew by one-third from the comparison period to 110 MEUR. This exceeded our estimate, driven by all three segments outperforming forecasts and, in particular, stronger-than-expected organic revenue growth.

Despite the brisk revenue development, the period's profitability fell significantly short of our expectations, and Relais reported an adjusted EBITA of 8 MEUR in Q2, while our forecast was 9.2 MEUR. This was influenced by, among other things, the relocation of Raskone's large branch in Commercial Vehicle Services and new openings in Technical Wholesale, where revenue growth from new units lags behind expenses. Also, a provision for receivables made as a result of management's discretion weighed on the result by 0.6 MEUR. Thus, we believe the subdued profitability is largely temporary, although the ramp-up of new units in wholesale will take a few quarters. A positive aspect of the report was the high cash conversion ratio, which rose to 100%. Based on management's comments, this reflects more permanent changes in working capital as slow-moving and less profitable products have been eliminated. Thus, concrete signs of the targeted efficiency improvement were observed.

Our earnings estimates decreased slightly

In line with its guidance policy, Relais does not provide numerical guidance. We forecast Relais' current year revenue to grow by 21% to 465 MEUR. This reflects the acquisitions made, but we believe organic growth will remain at a good level of ~3% in H2'26. We expect the adjusted EBITA margin, however, to decline to 9.3% this year (2025: 10.0%). Profitability is eroded by the change in the revenue structure due to the increasing relative share of Commercial Vehicle Services. In addition, the current year's performance is overshadowed by factors that weighed on profitability even in Q2. Thus, we expect next year's profitability to rise significantly (2027e 10.1%), as strong organic growth brings efficiency gains and the new units in Technical Wholesale, in particular, improve their profitability with growth. However, we made some forecast revisions for these for the rest of the year and next year, as we believe the revenue of the new units will gradually increase, which also determines the pace of profitability improvement. Our adjusted EBITA estimate for the current year decreased by 7% due to the Q2 report and estimate revisions, while the corresponding estimates for the coming years decreased by only about 0-2%.

Valuation is rather reasonable

Relais’ P/E ratios for 2026-2027 based on our estimates, are 13-11x and corresponding EV/EBITA ratios are 12x and 9x. In our view, these absolute valuation multiples are moderate and have significant upside. This overall valuation picture is also supported by the relative valuation, as the company trades at a clear discount to both of our peer groups. Our cash flow model is also clearly above the current share price. Thus, we believe that investors can get on board Relais' value-creating stock through long-term active capital reallocation at an attractive price. This keeps the risk/reward ratio attractive and supports further share purchases.