INNIO N.V. "Innio doubt about it; Initiate Buy, $47 target" (Buy) Mehrotra

Research evidence excerpt

INNIO N.V. "Innio doubt about it; Initiate Buy, $47 target" (Buy) Mehrotra

INNIO N.V. UBS Research

EXECUTIVe summarY

We initiate coverage of INIO with a Buy rating, as it is strategically positioned to benefit

from accelerating demand for on-site, behind the meter power solutions. In our view,

the combination of rising electricity intensity, accelerating compute demand, and limited

grid capacity is driving a durable cycle of investment in distributed and behind the meter

power solutions, where INIO is strategically positioned. The company's solutions are

particularly well suited to this environment, offering an efficient, reliable alternative

which is faster to deploy.

We see a compelling earnings growth profile supported by both top line expansion and

margin improvement. We forecast 31% annual revenue growth through 2028, driven

primarily by data center equipment, with overall revenue more than doubling over the

period. This growth, combined with a favorable shift toward higher margin data center

mix drives our expectation of EBITDA more than doubling by 2028 vs 2025. Moreover,

service revenue related to current strong growth in equipment installation will start

reflecting in 2030 and beyond. This should drive sales and margin inflection in service,

reinforcing earnings durability beyond the current forecast horizon.

In this context, we believe the company can drive sustained double digit% earnings

growth over the next 3-5 years, supported by strong order momentum, higher backlog

and positive demand dynamics.

On valuation, we apply a 27x multiple on 2028 EBITDA, broadly in line with peers (GEV,

VRT) exhibiting similar growth and margin characteristics, which we believe is justified

given the company’s structural tailwinds and earnings trajectory. Our thesis is not