• We expect solid Q1 margins to be repeated in Q2
• Minor estimate revisions totalling <1% of EBITA
• Share trading at 16-14x '25e-'26e EV/EBITA

Q2e: FX headwinds, but continued strong margins

We expect Nolato to report Q2 net sales of SEK 2,345m, a y-o-y decline of 4%, of which +2% is organic and -6% from FX, driven mainly by the weaker USD. Following its CMD on 13 March, when Nolato raised its EBITA margin target from 10% to 12%, the company delivered an impressive 90bp sequential margin increase already in the Q1 report. Moreover, the company's comments in conjunction with the Q1 numbers gave us the impression that the improvements were structural in nature rather than temporary, so we expect slight further sequential improvements into Q2 as well. We model a Q2e EBITA of SEK 264m, for an EBITA margin of 11.2% (11.0% in Q1'25, 10.0% in Q2'24).

Minor estimate revisions totalling <1% of EBITA

We make only minor revisions to estimates, updating FX assumptions and trimming near-term margins in Engineered Solutions. All in all, our estimate changes amount to less than 1% of '25e-'27e EBITA.

Trading at 16-14x EV/EBITA

The share is trading at 16x '25e EV/EBITA, which goes to 14x for '26e (5Y avg. f12m EV/EBITA of 15.4x). However, note that our current estimates are more cautious than the company's ambitious targets introduced at the CMD. As an example, if Nolato achieves its organic growth target of 8% per year as well as its 12% EBITA margin target by '26, this would imply ~11% upside to our current '26e-'27e EBITA estimates.