Betolar H2'25: Significant growth expected this year

Translation: Original published in Finnish on 02/06/2026 at 07:05 am EET

Betolar's financial statements release was somewhat neutral compared to our expectations, with forecast lines slightly below our estimates, but guidance pointing to significant growth. We lowered our revenue estimates, but still expect clear growth in the coming years, supported by metal separation technology. The company's risk level remains very high relative to its balance sheet, estimates, and valuation. Thus, despite the potential long-term growth story, we believe the risk/reward is weak. We reiterate our Reduce recommendation and EUR 1.3 target price.

The main lines were close to our estimates

Betolar's H2 revenue was 0.5 MEUR, which was slightly below our revenue estimate. H2's new orders were, as expected, at a record high level of 1.8 MEUR, consisting mainly of the company's largest order in its history (1.4 MEUR) announced in October. H2'25's EBITDA was -1.6 MEUR, which was practically in line with our estimate. However, the company raised a larger-than-expected amount of support in Q4, which resulted in a slightly heavier cost structure than we anticipated. Due to increased indebtedness, higher financing costs burdened the bottom lines of the income statement, and H2'25's EPS settled slightly below our estimate at EUR -0.14.

Significant growth in guidance

Betolar guides that 2026 revenue would grow significantly from the previous year. This is in line with our estimate, but we believe that even significantly lower revenue growth than our estimate would be sufficient to achieve the guidance due to the low comparison figure. In 2026, we expect revenue to grow to just under 5 MEUR (2025: 0.9 MEUR). The growth in our estimate is mainly driven by the delivery of the 1.4 MEUR order announced in Q4'25, a small portion of which was already recognized in Q4'25, while the clear majority is estimated to be recognized in H1'26. In addition, we expect new sales successes in H1’26, which would support continued growth in H2. Although Betolar's largest order is directed at infrastructure construction, we expect the revenue growth engine in the coming years to come from metal separation technology and side-stream related businesses, which have been highlighted as strategic spearheads. In addition, according to the company's comments, growing blast furnace slag sales in India and Finland create potential for revenue growth.

With the cash flow from a large order, undrawn support, and remaining cash, the company's financing is secured for the current fiscal year, after which we estimate the company will need additional funding. Finding additional support earmarked for the green transition would give the company vital time to turn cash flow positive, which it aims to achieve by the end of 2027 (positive EBITDA). Although the order book, which has undergone a level adjustment, improves visibility, it is limited from H2'26 onwards. Estimate risks, combined with a tightened balance sheet, keep the stock's risk level in the highest category of the Finnish stock market. We slightly lowered our revenue estimates for 2026-2027 based on lower-than-expected orders and a quiet news flow at the beginning of the year.

A high risk level warrants caution regarding the stock

Due to Betolar's early development phase, the predictability of the business is lowand the risks associated with estimates are high. Based on our estimates expecting fast growth, Betolar's EV/S multiples (7x-4x) are higher than for the peers as a whole.  Our DCF model, which focuses on long-term potential, reaches EUR 1.30. However, options and financing needs put upward pressure on the number of shares in the model, which we believe limits the expected return. Stretched valuation combined with high business, financial, and estimate keeps the risk/reward ratio subdued in our books.