Pruning costs in Technical Wholesale - Q3 review

Relais’ Q3 adj. EBITA of EUR11.5m was slightly better than we and the market expected, albeit this was on lowered estimates ahead of the report. Despite earnings growing strongly in two of Relais’ three segments, Technical Wholesale continued to burden group profitability due to overcapacity, something that Relais is addressing with the aim to restore profitability as soon as possible. Our estimate revisions are small, so we reiterate our fair value range of EUR14.1–17.8 per share.

Q3 sales up by 10% but adj. EBITA up only by 5% Y/Y, as organic growth investments in Technical Wholesale have proven to be much larger than the current demand levels.

Adj. EBITA -2% to +2% for 2026–28e. We have only fine-tuned our assumptions after the Q3 results. Our adj. EPS estimates are down by 1–4% over the forecast period mainly driven by higher PPAs and taxes. While we expect Relais to report a declining adj. EBITA margin in 2026, we believe the current efficiency actions are right-sized, leading to clear earnings and profit growth in 2027e. Our estimates are close to pre-results Modular Finance consensus.

Focus on improving profitability and returns in medium term. Having completed eight acquisitions in 2025 and four in 2026, Relais’ balance sheet is stretched, with a net debt to EBITDA ratio of ~4x at year-end 2026e. Thus, in the near to medium term, we expect the company to focus on accelerating organic growth, consolidating recent M&A, improving profitability, freeing up NWC to improve cash flow, and ensuring targeted synergies before getting back on the M&A-driven compounder track.

Share price down 27% YTD, clearly underperforming our peer group. Relais’ share price is down 27% YTD, below our peer group median (+4%). On 2026–27e EV/EBITA and P/E, the stock is trading closer to the international vehicle spare parts companies but well below Nordic non-proven compounder peers, suggesting an interesting investment opportunity.