Translation: Original published in Finnish on 5/7/2026 at 8:00 am EEST.

Exel's Q1 figures exceeded our expectations across the board. The company's demand situation remained strong, and it reiterated its guidance, indicating significant growth and improved earnings. Given the strong performance in the first part of the year and the favorable market conditions, we have raised our estimates for the coming years. We are willing to look further ahead in terms of the stock's valuation, as the report strengthened our confidence in earnings growth materializing with increasing volumes. Thus, we see the expected return generated by our forecast earnings growth as attractive when looking to next year. Thus, we raise our recommendation to Accumulate (was Reduce) and our target price to EUR 10.5 (was EUR 8.25). 

Q1 print clearly exceeded estimates

Exel's revenue grew by 19% in Q1 to 30.2 MEUR, exceeding our estimate (27.6 MEUR). The year started faster than we expected, as we had anticipated growth to be more heavily weighted towards H2. We believe this development was driven by accelerated delivery requests related to, e.g., large conductor core orders.. Due to these and the progress in ramping up volumes at the Indian factory, the Energy customer segment reported significant growth (+85% y/y). Supported by revenue growth, the company's adjusted EBIT more than doubled to 1.5 MEUR, also exceeding our forecast (0.9 MEUR). According to the company, the development was supported by higher utilization rates, good delivery capability, and cost discipline. Exel's order intake was at a good level (30 MEUR), even though it decreased due to a larger order placed in the comparison period. Its order book also remained at a high level (99 MEUR, +128% y/y), which provides strong support for the growth phase. However, the structure of the order backlog is clearly longer than historically, and there is uncertainty regarding its exact timing.

Our earnings estimates for the coming years rose clearly

The company reiterated its guidance for the current year and expects its revenue (2025: 103 MEUR) and adjusted EBIT (2025: 3.2 MEUR) to increase significantly. According to Exel, growth will continue to be more heavily weighted towards H2. The company's market situation, on the other hand, has remained favorable, especially in Energy and Defense. We believe the company also seemed confident about its sales pipeline and the gradually increasing volumes from the Indian plant. The instability in the Middle East has not had any material impact on the company so far, but if the situation prolongs, we believe the risks will indirectly affect demand development.

Our growth forecasts for the current year increased due to the realized development and market situation. We estimate that growth will still be significantly more balanced between the two halves of the year than before. We now expect the company's revenue to grow by 21% this year to 125 MEUR (was 117 MEUR) and the adjusted EBIT to rise to 7.7 MEUR (was 6.8 MEUR). We also raised our growth forecasts for the coming years (+4%) due to continued strong market activity. Our increased growth estimates also flowed through to the bottom line, with our operating profit estimates for 2027-2028 rising by 9-11% and our EPS estimates by as much as 13-17%. Our 2028 forecasts (2028e revenue 165 MEUR, adj. EBIT%: 8.2%) are still clearly below the company's target levels (revenue 200 MEUR, adj. EBIT% > 10%).

Earnings growth will push the valuation to a low level next year

With our estimates, the stock's valuation appears rather neutral for this year (EV/EBIT 12x, EV/EBITDA 7x). In our view, it is justified to look ahead to next year for valuation, given the strong order book and developments that have increased confidence in the realization of earnings growth. Looking ahead to next year, we believe the valuation is already low (EV/EBIT 7x, EV/EBITDA 5x, P/E 11x). However, forecast risks are currently elevated, especially due to the ramp-up of the Indian plant and the timing of conductor core deliveries. Overall, we still see the risk-adjusted expected return becoming sufficiently attractive, but naturally, the realization of the expected return requires strong earnings growth to materialize approximately as we expect. Our positive investment view is also supported by our DCF model, which is at the level of our target price.