Exel Composites Q3'25: Accelerating growth is already in sight

Translation: Original published in Finnish on 11/7/2025 at 8:00 am EET.

Exel's Q3 operational development was well in line with our expectations. The company's order book continued to strengthen as the positive market development continued, and Exel also announced a new major framework agreement on the earnings day. The overall picture strengthened our confidence in our robust earnings growth expectations for the coming years, to which we also made slight positive revisions. With our current estimates, we see the stock's valuation as attractive looking to next year, which is why we reiterate our Accumulate recommendation and raise our target price to EUR 0.45 (was EUR 0.43). 

Q3 development operationally well in line with our expectations

Exel's revenue decreased by 2% in Q3, which was well in line with our expectations. The development was affected by the timing of deliveries, which were particularly related to the transfer of production from the Belgian factory to other factories. The company's adjusted EBIT was 0.9 MEUR, which was also in line with our forecasts. According to the company, its year-on-year profitability development was supported by the renewal of its operating model. However, the reported result was burdened by unexpected non-recurring items of 0.5 MEUR related to the transfer of Belgian production. At the bottom line, net financing expenses were higher than our expectations due to non-cash flow-affecting exchange rate changes on intercompany loans. 

Thanks to continued positive order intake (27 MEUR, +28% y/y), the company's order book grew to 49 MEUR (+61% y/y), providing a good foundation for growth. On the earnings day, Exel also announced a four-year framework agreement worth at least 25 MEUR, which further strengthens the order book in Q4. A negative aspect of the report was the cash flow development due to the commitment of working capital. Reflecting this, the net debt/adj. EBITDA ratio was slightly elevated (3.4x), which highlights the need for stronger earnings and cash flow in the coming quarters.

Guidance unchanged, small positive forecast changes

Exel reiterated its guidance and expects its revenue to increase (2024: 100 MEUR) and its adjusted EBIT to increase significantly from last year (2024: 1.7 MEUR). The company commented that market activity continued favorably in its customer industries, with the exception of Industrial. Exel commented that the transfers of Belgian production are in the final stages, which supports the acceleration of deliveries. In addition, the company had started commercial deliveries related to wind power from its Indian factory in September and stated that volume ramp-up was underway, which naturally supports revenue growth in the coming quarters.

Reflecting a report that met our expectations well, our operational forecasts for the current year remained unchanged, and we expect current year revenue to be 106 MEUR and adjusted EBIT to be 5.1 MEUR. Instead, forecast changes for the coming years remained limited, as we had already expected quite strong growth from the company in the coming years. However, our growth forecasts for 2026–2027 increased by 2-4% in line with order development (incl. framework agreement), which also pulled earnings forecasts upwards (adj. EBIT 2026e–27e: +6%). We currently estimate the company's revenue to grow by 22% next year and adjusted EBIT to be 8.9 MEUR.

Valuation at an attractive level looking to next year

With our updated estimates, the share's valuation for next year (P/E 9x, EV/EBIT 8x) is, in our opinion, at an attractive level relative to our accepted valuation (P/E 10x-14x, EV/EBIT 8x-12x, EV/EBITDA 5x-8x). At the same time, forecast risks remain elevated, especially due to the larger ramp-up of volumes at the Indian plant and the development of the plant's profitability. In our view, this and the cash flow that is currently moving in the wrong direction, limits a more significant upside in the multiples. Overall, we still consider the stock's risk-adjusted return attractive, as indicated by our DCF model, which takes into account the longer-term potential and is clearly above the share price (EUR 0.46/share).