Translation: Original published in Finnish on 9/25/2026 at 8:00 am EEST.

Exel Composites announced on Thursday that its Indian joint venture has signed a multi-year supply contract with significant potential with a customer in the wind power industry. Driven by the agreement, we raised our already high growth estimates for the next few years, although some uncertainty still surrounds the final delivery volumes. The agreement brings concreteness to growth expectations, and we still consider the stock's risk-adjusted expected return sufficiently attractive. Reflecting this, we reiterate our Accumulate recommendation for the share and raise our target price to EUR 17.5 (was EUR 15.0).

Major contract for the Indian factory

Following the new agreement, Exel's Indian joint venture Kineco Exel Composites India (KECI) will supply pultruded carbon fiber planks for the structural support of Suzlon Energy Limited's wind turbine blades. The parties estimate that the potential value of the deliveries will exceed 100 MEUR by the end of March 2029. We understand that the final value of the contract is determined based on the wallet share principle (the agreed share of Suzlon's total procurement received by Exel), meaning that the revenue ultimately realized by Exel depends on Suzlon's performance and, naturally, also on Exel's delivery capability. To our understanding, the agreement does not include minimum volumes, which increases the range of deliveries. The announced agreement is a continuation of the cooperation that began in 2024, which led to an order of ~10 MEUR announced in February 2025. Thus, in connection with the new delivery agreement, we estimate that Exel has also succeeded in taking a leap in its relative supplier position. At the same time, we see this as evidence of the Indian factory's delivery capability in a smaller scale category. With the agreement, the focus now shifts to the factory's delivery capability and profitability as volumes grow to the next scale. We provided our initial comments on the agreement here.

We raised our near-term growth forecasts even further

Distributed evenly, the value of the contract would correspond to an annual revenue of roughly 40 MEUR, but taking the range into account, we estimate the volumes to be 30–50 MEUR per year during the contract period. However, this requires the positive development of Suzlon and wind power construction in India to continue, as well as KECI's delivery capability to be maintained as volumes increase. We understand that Indian plant volumes will begin ramping up immediately, with full delivery capacity expected by April 2027 at the latest, when Suzlon's new financial year begins. Driven by faster-than-expected volume growth at the Indian factory, we raised our already high growth estimates for the next few years (2026e-28e +4–6%). We now expect the company's revenue to increase by as much as 30% y/y this year, with growth remaining strong next year as well (2027e revenue +21% y/y). We estimate that growth will continue at a double-digit rate in 2028 as well, but we still do not expect the company to reach its ambitious target yet (2028e revenue: 182 MEUR vs. target of 200 MEUR). Despite the upward revisions to our growth forecasts, we leave our margin forecasts largely unchanged (2026e–28e adj. EBIT margin: 6.4–8.6% vs. target >10%), as volume applications carry a lower margin profile than the company's Engineered Solutions.

Stronger earnings growth outlook supports expected return

In our view, the stock's valuation for this year is high based on EV multiples (EV/EBIT 16x, EV/EBITDA 10x) despite significantly growing earnings. However, given the recent order announcement, strong order book, and favorable market environment, we believe it is justified to already shift our focus to next year. With our robust earnings growth forecasts, the 2027 valuation settles at the lower end of the range we consider neutral (EV/EBIT 10x–12x), at 10x. With the order bringing more concrete visibility to our forecasts, however, we believe the share can be valued toward the upper end of the range, and we continue to see the risk-adjusted expected return as sufficient. Our positive view is also supported by our DCF model, which is roughly in line with our target price.