* Strong growth and continued margin improvement
* We raise '26e EBITA by 9%, '27e-'28e by 6% each
* 9x '26e EV/EBITA, 6-11% '26e-'27e lease-adj. FCF yields
An impressive showing given negative seasonality
Eltel reported Q1 net sales of EUR 191m (+7% vs. ABGSCe), up 13% y-o-y, of which +11% was organic growth (ABGSCe +3%). Q1 EBITA was EUR 3.1m (ABGSCe 2.0m) for a margin of 1.6% (ABGSCe 1.2%). The strong organic growth was driven by larger projects in Finland, and as such, we do not see it as replicable in future quarters. Most importantly, though, profitability was impressive given that Q1 is seasonally the weakest quarter for Eltel. The EBITA deviation versus our expectations was driven mainly by Norway, which has long seen weak market conditions. As such, it is good to see that the company's internal efficiency measures in the region are taking effect. Heading into Q2, we model organic growth of +2% and EBITA of EUR 8.2m for a margin of 3.9%, up from 1.2% in Q2'25. We expect continued margin accretion in the coming quarters, driven by an increasing share of new, more profitable end-markets, along with improved commercial terms on contracts in the company's legacy business areas.
We raise '26e EBITA by 9%, and 6% for '27e-'28e
We raise our top-line estimates, but do not extrapolate the strong organic growth, which was supported by larger projects in the quarter. We also raise margin assumptions, led by Norway, where cost cuts and improving demand suggest the business is past the trough.
9x '26e EV/EBITA, 6-11% '26e-'27e lease-adj. FCF yields
We model EBITA margin expansion to 3.6% in '26e, 4.1% in '27e, and 4.6% in '28e, building on what is now an 11-quarter streak of y-o-y margin improvement. On our estimates, the share is now trading at 9x '26e EV/EBITA and offers a 6-11% '26e-'27e lease adj. FCF yield.