Pantelakis Securities upgrades the valuation of ElvalHalcor, estimating that the investment program of over 850 million euros for the period 2026-2030 will transform the group's prospects and lead to a significant increase in profitability and cash flows.
The brokerage raises the target price to 6.50 euros from 4.65 euros, seeing an upside potential of about 31% from current levels, while it estimates that adjusted EBITDA will increase from 236 million euros in 2025 to about 454 million euros by 2031, within management's guidance range of 425-475 million euros.
The improvement in profitability is based on three key factors: the increase in production capacity by about 29%, the significantly greater use of recycled scrap, which reduces production costs, and the better utilization of existing investments through economies of scale.
Pantelakis points out that the recently announced share capital increase of 250 million euros covers the equity part of the investment program, allowing ElvalHalcor to finance its growth without excessively burdening its balance sheet.
At the same time, it forecasts that after the completion of the investment cycle, free cash flows will be significantly strengthened, creating the conditions for attractive returns to shareholders, with an estimated free cash flow yield of about 9% and a dividend yield of 4.4% for the period 2030-2031.
According to the brokerage, the market continues to value ElvalHalcor based on its old profile, without having fully incorporated the dynamics of the new growth cycle.