Original-Research: INDUS Holding AG (von Parmantier & Cie. GmbH): Buy

Classification of Parmantier & Cie. GmbH to INDUS Holding AG

Company Name:	INDUS Holding AG
ISIN:	DE0006200108
Reason for the research:	Update Q3 2024
Recommendation:	Buy
from:	18.11.2024
Target price:	34.30
Target price on sight of:	12 month
Last rating change:	no change
Analyst:	Daniel Großjohann, Thomas Schießle

2024 guidance after Q3 confirmed in key points, public share buyback offer announced
*Closing price XETRA (15 November 2024)
INDUS Holding AG generated sales of € 443.1 million in Q3 (9M 24: € 1,282.2 million; Q3 23: € 459.7 million), which was still 3.6% below the previous year's figure, but exceeded the H1 quarters of 2024. The Q3 EBITA margin (9.9%) was also higher than the H1 figure (8.8%). The annual, scheduled impairment test led to a total impairment of € 6.7 million and had a negative impact on EBIT. 9M earnings after taxes (€ 50 million; +15.2%) and 9M EPS (€ 1.89; +18.1%) exceeded the previous year's figures, which were negatively impacted by the result from discontinued operations. The already challenging environment for SMEs has not been made any easier by the political uncertainty (Germany, USA). The remarkable improvement in group sales and the operating margin during the year can therefore not yet be seen as a sustainable turnaround with a view to 2025. However, we believe that the INDUS share is still trading below its fair value, so the new public share buyback offer is consistent with this. Due to the high quality of the portfolio companies, the shareholder-friendly dividend policy (buyback programme; dividend yield > 5%) and the attractive valuation (P/E 2024e: 8.4), the INDUS share remains a Buy.
INDUS has already paid out around € 56 million to shareholders in H1 2024 via the regular dividend and a share buyback programme. A public buyback offer has now been announced (from 12.11.24 to 25.11.24; max. volume: 0.7 million shares at € 21.65) and a subsequent buyback programme (volume: max. 0.2 million shares or max. € 5 million). The repurchased shares are expected to be cancelled subsequently.
Outlook for 2024: INDUS has confirmed the key points of its guidance despite the challenging environment. Sales are still expected to be between € 1.7 billion and € 1.8 billion and the EBIT margin between 7% and 8%. The free cash flow target (> € 110 million) was also confirmed. In terms of EBIT, the result of the annual scheduled impairment test was the main reason for lowering the EBIT target to a target corridor of € 115 million to € 125 million (previously € 125 million to € 145 million).


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LEGAL NOTICE
This research report ('Investment Recommendation') was prepared by Parmantier & Cie. Research, with  contributions from Mr. Grossjohann, and is distributed solely by Parmantier & Cie. Research. It is  intended only for the recipient and may not be shared with other entities, even if they are part of the  same corporate group, without prior written consent. The report contains selected information and  makes no claim to completeness. The investment recommendation is based on publicly available  information ('Information'), which is considered correct and complete. However, Parmantier & Cie.  Research does not verify or guarantee the accuracy or completeness of this information. Any potential  errors or omissions do not create liability for Parmantier & Cie. Research, which assumes no liability for  direct, indirect, or consequential damages.
In particular, Parmantier & Cie. Research accepts no responsibility for the accuracy of statements,  forecasts, or other content in this investment recommendation concerning the analyzed companies,  their subsidiaries, strategies, economic conditions, market and competitive positions, regulatory  frameworks, and similar factors. While care has been taken in preparing this report, errors or omissions  cannot be excluded. Parmantier & Cie. Research, including its partners and employees, accepts no  liability for the accuracy or completeness of statements, estimates, or conclusions derived from the  provided information in this investment recommendation.
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