Enersense: Financing secured, focus on earnings growth

Translation: Original published in Finnish on 12/29/2025 at 8:00 am EET.

We reiterate our EUR 5.2 target price for Enersense and raise our recommendation to Buy (was Accumulate). We have incorporated the company's recently completed refinancing into our estimates and made minimal refinements to our operational forecasts. Due to the recent decline in the share price, the expected return based on earnings growth in the coming years has become very attractive again, in our view.

Financing package for strategy period finalized

The company recently completed its refinancing, in connection with which the previous 26 MEUR senior unsecured convertible bond was amended into a subordinated hybrid convertible bond. In connection with the refinancing, the fixed coupon rate on the loan will increase from 7.0% to 8.0% as of January 15, 2026. In addition, the initial conversion price of the loan was reduced from EUR 8.00 to EUR 7.00. Enersense also issued a new tap issuance of convertible capital notes worth 4 MEUR on similar terms. Thus, full conversion of the convertible notes would result in the issuance of ~4.3 million new shares, or a dilution effect of approximately 20.6%. However, the conversion price is well above the current share price, meaning the conversion of the loans hinges on the success of the strategy and significant growth in the company's value. With the approval of the amendment to the loan terms, the terms and conditions of the company's overall financing package (a 16 MEUR term loan, an 8 MEUR revolving credit facility, and a guarantee line of up to 40 MEUR) have also been met. In our estimation, this will secure financing for the strategy period and strengthen the balance sheet, as the convertible notes are recognized as equity in IFRS accounting. Our stance on the financing arrangements made is neutral, and we have commented on them in greater detail here and here.

We expect strong operational earnings growth in the coming years

We have updated our forecast to account for the effects of the financing arrangement that has been made. While the company did not disclose the exact details of the financing package (e.g., margin level), with the exception of the convertible note, we have assumed that the net impact of the refinancing is neutral in absolute terms at this stage. Thus, in line with the accounting practices for convertible notes, we decreased our estimates for financial expenses, while our estimates for earnings per share remained largely unchanged. We also did not take the possible dilution effect of the convertible note into account in our forecasts because the conversion price is significantly higher than the current share price.

Furthermore, we made minor adjustments to our revenue structure forecasts for the next few years, but these adjustments did not impact our operating earnings forecasts. We continue to assess the company's growth outlook for the coming years as strong, particularly in Power. In our view, Energy Transition also has clear growth potential over the next few years, though realizing this potential depends partly on a general economic upturn, especially in Europe. Similarly, we assess the market outlook for Connectivity as relatively stable. Reflecting the positive growth outlook, we estimate that the company will achieve double-digit operating earnings growth in the coming years (cf. adj. EBIT growth 2026e-28e: 11--28%/year), supported by revenue growth and strategic measures (especially the Value Uplift efficiency program).

Declining share price has made expected return very attractive again

We are confident that Enersense will achieve its earnings growth in the coming years, supported also by the Value Uplift program. We consider next year's EV-based multiples (including convertible notes as debt) to be quite moderate (2026e EV/EBIT 7x, EV/EBITDA 4.4x) compared to the levels that we deem neutral for the company (EV/EBIT 8x-12x, EV/EBITDA 5x-7x). Given the recent strengthening of the earnings turnaround, we consider the approximate midpoint of these ranges to be acceptable levels. Our positive view on the share is also supported by the other methods we use (e.g., DCF ~EUR 5.7/share).