Translation: Original published in Finnish on 10/26/2026 at 7:55 am EET.

Source: Inderes

Incap will publish its Q3 report on Thursday, October 29. We expect the company's revenue to have grown strongly, driven by the Lacon acquisition and slight organic growth. In terms of earnings, we expect growth to clearly lag behind revenue growth because we estimate that relative profitability has remained well below the company's historical level due to intensified competitive environment at the Indian factory and Lacon's lower margins. We do not expect Incap to change its guidance for the current year.

Lacon acquisition boosts revenue growth

We forecast Incap's revenue to have grown by 41% in Q3 to 73 MEUR. This growth has been driven particularly by the Lacon acquisition, which took place early this year, but we also estimate that organic growth remained slightly positive, as it did in Q2. In connection with its Q2 report, the company noted that the second half of the year would be stronger thanks to the order intake received in the first half of the year. According to our assessment, this is particularly evident in the growth of production volumes in the defense sector, and data centers are also indirectly driving demand. In contrast, we believe that the demand situation in Europe and in the more traditional industrial electronics sector has remained stable.

Margin pressure in India weighs on relative profitability

We expect Incap's adjusted EBIT to have increased by ~20% in Q3 to 7.0 MEUR. This corresponds to an adjusted EBIT margin of 9.6%, which is clearly lower than the company's peak levels in previous years. We estimate that profitability continued to be weighed down by the tightening competitive situation in India and Lacon's lower baseline profitability compared to Incap. We project that the availability of raw materials and components remained moderate. However, we estimate that the Lacon acquisition will increase operational earnings in euro terms. Our estimate is that non-recurring items in Q3 were limited to normal PPA amortization, and we forecast reported earnings per share of EUR 0.15, reflecting higher financial expenses resulting from the acquisition and the normal tax rate. We expect cash flow to have strengthened in Q3, in line with the normal seasonality of the business, although the organic growth rate and the viability of the raw material market will affect the amount of capital tied up in inventory.

Eyes on the development of the operating environment

We expect Incap to reiterate its guidance for the current year as stated in connection with the profit warning issued in the summer, according to which the company's revenue is 270–290 MEUR and comparable EBITA (corresponding to our estimated adjusted EBIT) is 26–29 MEUR. Reaching the revenue guidance only requires progressing at roughly the same level as in the beginning of the year, whereas achieving the EBITA guidance necessitates a clear improvement in earnings accruals during the rest of the year. However, we consider this realistic in light of the news flow from the industrial sectors and the normal seasonality of the business. Regarding adjusted EBITA, however, our estimate (26.7 MEUR) is at the lower end of Incap's rather narrow guidance range.

In the report, we will focus particularly on the root causes of margin pressures in India and their persistence, as well as the company's comments on demand and order intake. We will also closely follow the progress of the Lacon acquisition integration and the company's comments on the development of the operating environment outside of India. To offset the tightening competitive situation in India, we have seen certain positive signals from the market, such as macroeconomic data from the European industry and a positive profit warning from peer company Kitron. Kitron's strong momentum can be viewed as a positive signal for Incap because the two companies' demand and supply chains are driven by at least partially similar drivers.

Following the Q2 results, Incap launched a share buyback program, but its impact on Q3 earnings per share has still been negligible, in our estimation. We believe that share buybacks offer the company an attractive expected return compared to other capital allocation alternatives, considering the valuation level, which is moderate relative to the share's history, the company's strong balance sheet, and the likely pricing of targets in the M&A market.