GRK: Putting capital to work

Translation: Original published in Finnish on 5/19/2026 at 8:20 am EEST.

GRK announced yesterday that it is acquiring Keski-Suomen Betonirakenne Oy (KSBR). Given the company's robust net cash position, we consider this acquisition expected and consistent with GRK's previously communicated growth strategy. The target company is highly profitable and will increase GRK's share of private sector customers, thereby reducing its dependence on public projects. Although the transaction is still subject to approval by the authorities, we have already factored it into our forecasts at this stage. Since our last update, the rise in the share price has narrowed the expected return, which nevertheless remains adequate in our view. We lower the recommendation to Accumulate (was Buy) and raise our target price to EUR 16.0 (was EUR 15.0).

We believe acquisition aligns well with GRK's strategy

KSBR's revenue for 2025 grew strongly by 63% to 124 MEUR (2024: 76 MEUR) and the adjusted EBIT jumped by as much as 354% to 10.9 MEUR (2024: 2.4 MEUR). This corresponds to a very strong EBIT margin of 8.8% for the infrastructure construction sector. The acquired company specializes in complex concrete construction, renewable energy projects, and industrial construction. The company operates in Finland and Sweden. KSBR's references are clearly weighted toward the private sector, which we estimate accounts for most of the company's revenue. The acquisition will diversify GRK's customer base and balance its project portfolio. In addition, the transaction strengthens GRK's foothold and operational capabilities in Sweden, which has been one of the company's key geographical growth targets.

KSBR's development over the last five years has been uneven. Revenue and profitability grew strongly initially in 2020–2022, after which both declined in 2023–2024. Last year, growth picked up again, and profitability reached an excellent level. We estimate that the weaker development in 2023–2024 was influenced by cost inflation, which was observed more broadly across the industry. In addition, we believe that the peak in onshore wind power construction occurred around 2021–2023, which likely also supported KSBR’s volumes during those years.

We deem purchase price to be reasonable

The base purchase price is 85.5 MEUR, of which 58.7 MEUR will be paid in cash and the remainder in new GRK shares. With additional purchase prices, the maximum debt-free purchase price could increase to approximately 97.5 MEUR. Considering the net cash of more than 20 MEUR on KSBR’s balance sheet and the base purchase price, we estimate the transaction's enterprise value (EV) to be around 65 MEUR. Relative to KSBR's EBIT of 10.9 MEUR last year, the transaction's EV/EBIT multiple is roughly around 6x. We consider this valuation to be moderate given the acquired company's high profitability and its strong order book of 110 MEUR at the end of the year. We have added the transaction to our estimates. If realized, the transaction will affect GRK's financials starting July 1, 2026. Our updated estimates surpass the company's current guidance, and we anticipate that the company will revise its guidance once the transaction is finalized. In our forecasts, GRK’s balance sheet remains strongly net cash-positive despite the expected completion of the transaction, which will enable continued growth, including through acquisitions.

Expected return still sufficient

Based on our forecasts, which take the deal into account, GRK is valued at approximately an 8x EV/EBIT multiple for 2026–2027. Despite the rise in the share price since our last update, the stock is trading at a discount relative to the range we estimate for its fair value (EV/EBIT 9–12x). In addition to this, the share offers a dividend yield of around 4% for the coming years, which, in our view, raises the total expected return to an adequate level. The fair value derived from the updated DCF model (EUR 16.6) also warrants a positive recommendation.