Fodelia extensive report: Focus on transforming the institutional catering market

Translation: Original published in Finnish on 3/23/2026 at 8:28 am EET.

Fodelia’s earnings are currently generated almost entirely by Feelia, which has a strong value creation profile, a unique position in the industry at least for now, and significant growth potential in the institutional catering market. We estimate strong earnings growth in the coming years, which, when combined with a low valuation, makes the risk/reward attractive. In light of the recent decrease in the share price, we adjusted our recommendation (was Accumulate) but lower our target price to EUR 5.5 (was EUR 5.7) due to minor estimate cuts and the risk associated with accelerating inflation.

Innovator of the institutional food market

Following past endeavors, Feelia's current strategy emphasizes focusing on the company’s most competitive businesses, particularly Feelia, which plays a central role in value creation and accounts for over 90% of the group’s EBIT. Since going public, Feelia’s revenue has grown organically by an average of 20% per year, and its return on invested capital is high, thanks to a standout business model in the industry (ROI: ~20%). Feelia manufactures cost-effective, pre-cooked meals with a long shelf life that are tailored to the needs of the elderly care, school, and pre-school segments. In recent years, Feelia has significantly increased its market share in the industry, replacing traditional, largely manual food production. In contrast, Oikia, a manufacturer of snacks, has a growth and profitability profile closer to the food industry average. Oikia has focused particularly on sales of its own-brand products in recent years (2025: 22% growth), as its business has historically depended greatly on contract manufacturing for retailers (2/3 of sales), where margins are low.

Feelia is pressing ahead with sales and customer acquisition

We forecast strong earnings growth (adj. EBITA) of around 20% for Fodelia in 2026-28, driven largely by Feelia's double-digit organic growth (avg. 13% annually) and Oikia's estimated earnings recovery.

Feelia’s growth outlook is supported by factors such as the recent growth in its customer base and the nearly doubling of its sales resources under new management. While Feelia still has room to grow in the private sector as well, for long-term growth it would be important for the public sector to increasingly adopt genuinely market-based food services, too. Feelia's relative profitability has not improved in recent years because the company has added many new products to its production line to expand its customer base. However, the company aims to streamline production and increase product-specific manufacturing volumes in the future, making better use of the factory's capacity.

At Oikia, earnings fell to a low level in 2025 due to factors such as unfavorable private label agreements and intensifying competition. We expect the renewal of agreements to gradually restore profitability to levels closer to those of the long term (2026-28e EBIT: 2.6- 3.3% vs. 2021-25 average: ~5%). For Oikia's long-term earnings growth, it would be crucial for the company to continue strengthening its market share of branded products, which showed positive signs in 2025.

Valuation has fallen to cheap levels

Fodelia’s earnings-based valuation (adj. EV/EBITA 2026e: 10x) is, in our view, very cheap, considering the company's profile, and is also clearly lower than levels seen in recent years. We believe that projected annual earnings growth of some 20%, combined with a dividend yield of 2–3%, offers strong upside for the share in the coming years. A fair earnings-based valuation for a profitable growth company like Feelia would be closer to 15x in our estimation, a figure that should be more fully reflected in the share price going forward as the group has streamlined its operations. However, in a negative scenario, the energy crisis linked to the war in Iran and accelerating inflation could weigh on short-term profitability, which could delay the realization of the upside potential.