Acquisitions And European Expansion Will Drive Enduring Aftermarket Demand

Key Takeaways

• Strategic acquisitions and expansion into new markets are expected to drive significant revenue growth and operational synergies.
  
• Focus on commercial vehicle aftermarket services and efficiency initiatives should support stable demand, margin improvement, and resilient earnings.
  
• Heavy reliance on debt-funded acquisitions, limited geographic and market diversification, EV disruptions, rising inventories, and leadership changes all threaten growth prospects and financial stability.

Catalysts

Operates as a consolidator and acquisition platform for vehicle aftermarket in the Nordic and Baltic countries.

• Recent strategic acquisitions (Team Verkstad, Matro Group, additional workshops) have not yet fully contributed to the income statement but are expected to increase revenue and EBITDA significantly as their results become consolidated, with further synergy potential from cross-selling and branding initiatives.
  
• The company's continued focus on commercial vehicle aftermarket services positions it well to benefit from the increasing average vehicle age in Europe and the Nordics, supporting stable, recurring demand for repairs and parts, thereby underpinning resilient revenue growth and improved earnings stability.
  
• Relais Group's expansion into Central Europe via the Matro acquisition opens up a significantly larger addressable market and the potential for leveraging its proprietary brands, enabling both top-line growth and operating margin improvement from economies of scale and broader distribution.
  
• Ongoing investment in operational excellence programs, logistics optimization, and digital platform development across acquired companies are expected to raise efficiency and reduce SG&A as a percentage of sales, positively impacting net margins and free cash flow as integration progresses.
  
• Fragmented regional markets and a robust acquisition pipeline provide substantial runway for further scale-driven growth and margin expansion, especially as urbanization and last-mile logistics bolster long-term aftermarket demand, supporting sustained revenue and EBITDA growth.

Relais Group Oyj Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Relais Group Oyj's revenue will grow by 13.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 5.6% today to 6.0% in 3 years time.
• Analysts expect earnings to reach €28.8 million (and earnings per share of €1.52) by about August 2028, up from €18.7 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €34.4 million in earnings, and the most bearish expecting €24 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.0x on those 2028 earnings, down from 16.2x today. This future PE is lower than the current PE for the FI Trade Distributors industry at 16.4x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.62%, as per the Simply Wall St company report.

Relais Group Oyj Future Earnings Per Share Growth

Risks

• Relais Group's long-term growth is heavily acquisition-driven, and the aggressive M&A pace has led to significantly increased debt, including the use of bridge loans and higher lease liabilities; if integration synergies do not materialize as planned or if financing conditions tighten, this could pressure future net margins and constrain free cash flow.
  
• The company's geographic concentration remains focused in the Nordics and adjacent regions with only recent, early-stage expansion to Benelux and Central Europe-meaning broader growth remains exposed to economic downturns or increased competitive intensity in these limited markets, jeopardizing revenue stability and diversification.
  
• Relais depends substantially on the commercial vehicle aftermarket, but the accelerating shift to electric vehicles (EVs), stricter environmental regulations, and potential for rapid technological change (e.g., digital vehicle architectures, ADAS, and direct OEM sales) could reduce long-term demand for traditional parts and services, ultimately shrinking the addressable market and impacting growth in revenue.
  
• Rising inventory levels (due to acquisitions and slow organic sales, particularly after a warm winter) combined with increasing working capital needs may strain liquidity and expose the company to inventory obsolescence risk if demand patterns change, negatively affecting future earnings and return on capital.
  
• CEO succession and ongoing management restructuring introduce execution and continuity risks, especially since much of Relais' success to date has depended on the current team's contacts, M&A discipline, and operational culture-missteps in leadership transition could impact strategic execution, slowing growth and margin improvement.

Valuation

• The analysts have a consensus price target of €19.95 for Relais Group Oyj based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €484.2 million, earnings will come to €28.8 million, and it would be trading on a PE ratio of 16.0x, assuming you use a discount rate of 8.6%.
  
• Given the current share price of €16.8, the analyst price target of €19.95 is 15.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.