* Q3e sales +6%, with 5% organic growth
* Raised EBITA driven by new contracts
* Share trading at 15x '26e EV/EBITA, goes to 9x in '28e
Q3 expectations
Eltel has had an active few months, securing the Telenor agreement, signing the previously awarded Vattenfall contract and making a small Danish acquisition. For Q3’26, we forecast sales of EUR 221m, up 6.2% y-o-y, with 5.2% organic growth and a 1.0% FX tailwind. Telenor represents ~EUR 95m in average annual revenue, transitioning from H2’26 to mid-2027. As it replaces existing business, we conservatively add EUR 20m/35m to '27e/'28e sales at 3%/4% incremental EBITA margins, adding EUR 0.6m/1.4m to EBITA. Vattenfall starts in June '27, representing ~EUR 34m in annual revenue over four years. Since we have assumed growth in Sweden, this de-risks our forecasts rather than adds to it. The acquisition of a street lighting business in Denmark (~9 FTEs vs Group average FTEs 3,686 in Q2'26) and a frame agreement with Konstant de-risk our Denmark estimates but do not move the estimates materially.
Raised organic growth assumptions
Into this report, we make a change of analyst. We raise our estimates for organic growth but keep margins fairly intact as we have limited visibility on the new contracts. This results in our '27/'28e EBITA rising by 2%/3%.
Strategic shift now clearly improving the financials
The strategic shift away from a largely telecom-focused business model towards more diversified and faster-growing markets is now starting to show more clearly in the financials. There is still much room left to reach the EBITA margin target of 5% (compared to 3.1% on a r12m basis), and our estimates remain somewhat short of the target at 4.1% for '27e and 4.5% for '28e. Still, we model a substantial '26e-'28e adj. EBITA CAGR of 24%. On our estimates, the share is trading at 15x '26e EV/EBITA, which falls to 9x by '28e.