Translation: Original published in Finnish on 2/27/2026 at 7:45 am EET.

Incap's Q4 report was positive overall due to strong profitability and cash flow. The guidance for the current year was also in line with our expectations, and we did not make any substantial estimate changes after the report. We reiterate our Buy recommendation for Incap and revise our target price to EUR 13.00 (was EUR 12.00) on the back of a moderate decrease in risk level. We believe that the earnings growth, driven by both inorganic and organic factors this year, combined with a reasonable valuation, still creates a very attractive expected return for the stock in both the short and long term.

Year-end profitability was exceptionally strong

Incap's revenue in Q4 decreased by 7% to 55 MEUR and adjusted EBIT by 9% to 8.0 MEUR. The decline in revenue, impacted by exchange rates, was well in line with our expectations. Adjusted for FX, growth was flat, so we estimate the company's volumes remained very close to the comparison period's level, although there were likely variations between units. Despite revenue being in line with expectations, Incap's operating result exceeded our forecast quite clearly, even though it was burdened by a 0.6 MEUR inventory write-down. We estimate that the product mix, in particular, was very favorable at the end of the year, and other factors may have also slightly supported profitability in Q4. However, Incap's adjusted EBIT margin of 14.4% in Q4 and 12.1% for the full year 2025 were again a strong indication of the company's solid underlying performance. The reported figures on the bottom line were in line with our expectations, but they included 0.9 MEUR in one-off costs related to the Laco acquisition already in Q4 (not in our forecasts). From a cash flow perspective, the company's year-end performance was stronger than we expected, as working capital rolled back significantly. As expected, Incap, saving its capital for organic and inorganic growth, will not pay a dividend.

Guidance was also in line with expectations

Incap guided that its revenue and adjusted EBITA for the current year would be clearly higher than last year. Last year, Incap recorded an adjusted EBITA of 25 MEUR (same as adjusted EBIT) on revenue of 215 MEUR. As we see it, the guidance practically implies 20-40% growth for both revenue and operating profit. Our forecasts, which included the Lacon acquisition, anticipated ~40% growth in both revenue and earnings for the company, so the wording of the guidance was precisely in line with our expectations. In our view, the company should reach the lower end of the guidance range simply by virtue of the completed Lacon acquisition and the solid performance of the rest of the portfolio, whereas reaching the upper end and our forecasts also requires organic growth. In our view, the news flow from the macroeconomy and the industry has developed in a slightly positive direction, especially in Europe, and the company should also have new, potentially significant, customers in India in the ramp-up phase. We have not made any material changes to our near-term forecasts for Incap. In the coming years, we forecast the company to achieve an average of 18% annual earnings growth at the adjusted EBIT level, driven by the Lacon acquisition, a gradually improving market, and slight market share gains (incl. new customers and increased shares from existing deliveries).

Valuation picture remains very attractive

Incap’s adjusted P/E ratios for 2026 and 2027 based on our estimates are 13x and 11x, and the corresponding EV/EBIT ratios are 9x and 7x. Especially on an EV basis, the multiples are below our accepted ranges for the company already for this year (as well as within the range when calculated from the modest realized result of 2025). In our view, the expected return, consisting of earnings growth and a slight upside in multiples, is clearly higher than the required return in the short and medium term. We slightly lowered our required rate of return as we believe the strong Q4 report somewhat reduced the stock's risk profile. A significant relative discount and the DCF value around our target price also support a strongly positive view on the share.W