Translation: Original published in Finnish on 10/30/2026 at 7:52 am EET.

Incap's Q3 figures clearly exceeded our forecasts in operational terms. While there will be some crosscurrents in the company's operations in India next year, we made no material changes to our estimates following the report. However, we slightly lowered our required return, which we had increased in the summer, as we feel that the good news outweighs the bad for now. We raise Incap's target price to EUR 11.00 (was EUR 9.50) and maintain our Accumulate recommendation. As the earnings turnaround that began in the summer continues, we believe the share remains reasonably attractively priced (2027e: EV/S 0.7x, EV/EBIT 8x). 

Q3 exceeded our estimates at all earnings levels

Incap’s revenue grew by 56% in Q3 to a record-breaking 81 MEUR and clearly exceeded our estimates. In addition to the Lacon acquisition, growth was driven by demand from defense sector customers, and organic growth accelerated to an impressive 18%. Incap's adjusted EBITA increased by 50% to 8.6 MEUR, and the adjusted EBITA-% was 10.7%. The result clearly exceeded our expectations, thanks to revenue growth and a likely favorable product mix as well. On the lower lines, the result was supported by a 1.2 MEUR revaluation of the earn-out, while there were no major surprises in financial expenses and taxes. Thus, Incap's EPS rose well above the comparison period and our estimates to EUR 0.23. The company's cash flow was burdened by working capital tied up by volume growth and the challenging component market.

Guidance appears cautious; India's customer profile is changing

Incap reiterated its guidance according to which its revenue for this year is 270-290 MEUR and comparable EBITA 26-29 MEUR. Considering the robust Q3 figures and comments indicating a strong order intake, this guidance seems cautious. Incap also stated, in connection with the report, that its largest customer is expanding its supplier base. While this will reduce the company's delivery volumes to this customer in the future, new data center customer accounts ramping up in India are expected to offset the impact. Based on current information, it is difficult to assess the net impact of the crosswinds in India, especially for next year, although management certainly seemed confident about its ability to manage the situation. While the reduction in deliveries to the largest customer is certainly not positive news, Incap's customer risk is likely to continue decreasing in the near future as well.

We now expect Incap's revenue to grow by 35% this year to 289 MEUR and adjusted EBIT by 8% to 28.3 MEUR. Thus, our estimates are at the top end of the guidance ranges, and we also consider a positive profit warning possible at the end of Q4 or in January. In the coming years, we estimate the company will be able to grow organically at a rate of 6-8%. In our estimates, revenue growth is driven by the Lacon acquisition, deliveries to the defense sector, new customers at the Indian factory, and other relatively small customer wins, while the falling volume of the largest customer acts as a counterweight. As growth continues, we estimate that the company has the preconditions to maintain its profitability (adj. EBITA-%) at 10%, despite intensified competition in India, an estimate that is clearly lower than the company's historical outcomes from previous years. We expect the company to present a growth-oriented strategy at its November CMD and set financial targets that could range from 8–10% for organic growth and 10–11% for adjusted EBITA in the medium term.

Valuation metrics still lean green

Incap’s adjusted P/E ratios for 2026 and 2027 based on our estimates are 14x and 13x, and the corresponding EV/EBIT ratios are 10x and 8x. We believe these are favorable multiples, even though a strong Q3, positive news flow in the sector, and the share buyback program that inspired confidence have quite justifiably raised the multiples slightly following the summer profit warning. The share’s relative discount is significant, and the DCF value also supports a positive view on the stock. Due to the recent positive overall development (incl. capital efficiency and risks), we have lowered our required return in the model, even though we also raised the risk-free rate to 3% (was 2.5%).