Translation: Original published in Finnish on 10/22/2025 at 9:00 pm EEST.

Relais' performance in Q3 was operationally slightly better than we anticipated, as its wholesale operations achieved strong organic growth despite subdued market development. In line with our slightly raised overall estimates, we are raising our target price for Relais to EUR 19.0 (was EUR 18.5) The share is currently moderately valued, so we reiterate our Accumulate recommendation. 

Organic growth is going strong

Relais' Q3 revenue grew by as much as 35% year-on-year to 101 MEUR, which exceeded our 97 MEUR estimate. The majority of the growth came from acquisitions, particularly the TVH acquisition, which bolstered the Repair and Maintenance business area. We view the wholesale market development in operating countries as relatively stable, against which the 7% organic growth in the Technical Wholesale and Products business area was a strong performance and another sign of its competitiveness. This is also why our estimates were exceeded. At the same time, the slight organic decline in revenue in Repair and Maintenance reflects, in our view, the subdued market situation rather than company-specific factors.

The operating result adjusted for amortization of acquisitions (EBITA) for Q3’25 was 8.8 MEUR, which was below our forecast. However, this is attributable to the amortization of acquisition-related fair-value adjustments (1.7 MEUR), which would have brought the result quite in line with our forecast when adjusted. Taking this into account, the earnings development of the underlying businesses was largely in line with our expectations. We have adjusted this non-recurring PPA amortization in line with other similar amortizations, resulting in adjusted earnings per share of EUR 0.37 for Q3, which is again well in line with our forecast.

We made minor upward revisions to our forecasts

Following the Q3 report, we have made slight positive adjustments to our growth estimates, raising our expected trend for organic growth in the Technical Wholesale and Products business area, as it delivered surprisingly positive results. These were also reflected in the operational earnings forecasts for the coming years, which rose by 5% at the EBITA level. However, slightly higher net financing cost projections offset some of this, resulting in just a 3% change in projected earnings per share. Relais' financial position is quite good (net debt/EBITA 2.4x according to our calculations), enabling the company to make considered and selective acquisitions and thus continue allocating capital in line with its strategy. We expect the new CEO to continue with this proven company playbook, and we do not expect the upcoming strategy update to bring any significant changes to the big picture.

Price tag is cheap

The P/E and EV/EBITA multiples for next year, which fully account for the acquisitions Relais has already made and are therefore more relevant, are just under 11x and just over 9x. In our opinion, these multiples are quite reasonable and there is upside given Relais' operational business and track record in capital allocation. Relais is valued roughly in line with companies engaged in similar businesses, whereas compared to serial acquirers, the valuation is at a significant discount. In our opinion, Relais' justified valuation lies somewhere between these two peer groups. Thus, when viewed through the lens of peer valuation, we believe that the current valuation level does not reflect value created through capital allocation. Given the company's track record and financial position, we believe it is reasonable to rely on its continuation, so we find the risk-reward ratio of the stock is attractive.