Incap: Balance sheet put to work to increase upside potential

Translation: Original published in Finnish on 1/7/2026 at 7:29 am EET.

We reiterate our Buy recommendation for Incap and revise our target price to EUR 12.00 (was EUR 11.00). While we see strategic logic in the Lacon acquisition, we believe the deal's value creation is primarily based on profitably growing Lacon as part of Incap and realizing commercial synergies between the companies, given a neutral valuation at best at the outset. The debt-financed acquisition has clearly raised our estimates for Incap in the coming years. Additionally, we believe the acquisition will slightly decrease the company's risk profile by diversifying its customer base. We find Incap’s valuation low (2026e: EV/EBIT 8x). Thus, we believe the stock's risk-adjusted expected return will be strong provided earnings show clear organic and inorganic growth next year. 

Incap acquires German Lacon in a transaction to be completed in Q1

In early December, Incap announced it would acquire the shares of the German company Lacon for 50 MEUR (in addition to a conditional additional purchase price of 5 MEUR). On paper, we see no clear obstacles to compatibility between Lacon and Incap. It is not particularly straightforward to assess the purchase price for accounting reasons, and Lacon's result is likely to have declined last year. Based on the realized figures, we do not believe the purchase price is particularly cheap. On the other hand, the somewhat high purchase price relative to the realized figures and the relatively moderate additional purchase price may also be due to Lacon's strong outlook (incl. orders from the defense sector, for example). Nevertheless, we believe the transaction's value creation is primarily based on Lacon's profitable growth as part of Incap and the achievement of commercial synergies between the companies.

Acquisition raised our estimates quite clearly

While we see no obstacles to completing the transaction, the planned timeline in Q1 may still be subject to change. We included Lacon in Incap's estimates starting from the beginning of Q2. Incap's revenue estimates for the coming years increased by around 30% due to the acquisition. Despite Lacon's weaker profitability compared to Incap's, the estimates for EBIT and adjusted EPS increased by 10-20% for the coming years (incl. PPA amortizations and their adjustments, adjustments made to Lacon's estimated goodwill amortizations, estimated IFRS 16 adjustments, increased financial expenses due to an additional 30 MEUR loan, marginal revisions to the tax rate, and minor one-off costs). We did not revise our estimates for the current year. This year, we expect Incap's revenue to decrease by 7% to 215 MEUR and adjusted EBIT by 18% to 24.7 MEUR, which is in line with the company's guidance. In the coming years, we forecast the company to reach an average of 20% earnings growth at the adjusted EBIT level, driven by the Lacon acquisition, a gradually improving market and slight market share gains (including new customers and increased shares from existing deliveries). 

Share valuation is very attractive provided that earnings growth materializes

We decreased our required return for Incap somewhat, as the Lacon acquisition weighs on Incap's largest customer's revenue share by around a quarter, bringing it down to 30%, according to our estimate. Incap’s adjusted P/E ratios for 2025 and 2026 based on our estimates are 22x and 12x, and the corresponding EV/EBIT ratios are 10x and 8x. The multiples we have calculated based on next year's modest result are below the range we have approved for the company on an EV basis. In our view, the expected return of the share, consisting of earnings growth, is clearly higher than the required return in the short and medium term. However, we emphasize that realizing the expected return will require the company to grow its earnings through both organic and inorganic drivers. Relative discount and the DCF value around our target price also support a strongly positive view on the share.