In this equity report, analysts Marcus Abbestam and Filip Blazevic take a deep-dive into Instalco AB, a supplier of technical end-to-end solutions on the Nordic Installation and Service market. The company utilizes a growth-by-acquisition model, driving sales and profitability improvements on a fragmented SEK 202.0bn market. Our analysts estimate future top-line growth of 17.7% CAGR 2019-2025 together with an EBIT growth of 20.9% CAGR 2020-2025, which indicates a potential upside of 39.6% to 50.4%.

Investment highlights:

  • The company’s acquisition-based strategy is well-positioned as scale will be vital for further growth as the market stagnates.
  • A strong cash conversion ratio and a decreasing Net Debt/EBITDA paves the way for a continued high rate of acquisitions, leading to acquired sales of SEK 1.6bn in 2025E.
  • Synergies gained from acquisitions are expected to drive the EBIT margin from 8.6% to 10.2%, leading to a maintained high RONIC.

To get the full elaborate view on the case, please see the report below: