Original-Research: INDUS Holding AG (von NuWays AG)

Classification of NuWays AG to Indus Holding AG

Company Name :	Indus Holding AG
ISIN:	DE0006200108
Reason for the research:	Update
Recommendation:	Buy
from:	10.03.2025
Target price:	EUR 34.00
Target price on sight of:	12 months
Last rating change:
Analyst:	Christian Sandherr

Buybacks completed // expansionary fiscal policy to fuel growth

Topic: Indus Holding successfully completed its share buyback program and cancels € 1.1m treasury shares. Further, the announced € 500bn special funds for infrastructure projects by the prospective German Chancellor Friedrich Merz could have a significant impact on Indus Holding future growth.

Share buyback completed. On November 11th, Indus Holding announced a public tender offer to buy back 700,000 shares at a price of € 21.65 per share as well as an open market buyback program for up to 200,000 shares starting on December 2nd. While the tender offer was already completed in November, the open market program was executed over the last months and ended successfully on March 4th with an average price of € 21.20 for 200,000 shares in total. In addition, Indus Holding retired 1.1m treasury shares (4.1% of total shares), which were acquired in February 2024 to increase EPS and return cash to its shareholders. The recently acquired 0.9m shares (3.5% of the new number of shares) are still held as treasury shares and might be used for future M&A activities.

This is positive news in our opinion, as we already flagged in our update from January 10th, Indus Holding is clearly showing improvements in their way they think about capital allocation, which is a crucial skill for every serial acquirer. Not only has Indus Holding acquired these shares below the current stock price (€ 24.50) but also below our estimated intrinsic value of € 34, thus offering attractive ROICs. Nevertheless, we would have liked Indus Holding to have acted more decisively and bought back the full authorized 10% of the outstanding shares.

Expansionary fiscal policy to fuel future growth. On March 4th, election winner and prospective new Chancellor Friedrich Merz from the Christian Democrats (CDU) as well as the Bavarian Christian Social Union (CSU) and the Social Democrats (SPD) discussed a € 500bn special fund for infrastructure investments over the coming 10 years, next to a sizable fund for defense. It is planned to pass the law before the new government takes office. This could substantially support Indus Holding ’ growth as c. 50% of its sales are from Germany and many of its holdings would be involved in infrastructure projects.

For instance, Betek (17% of sales) and Wirtgen, a subsidiary of John Deere control together c. 65% of the road milling market. As road milling picks last only for around 8 hours, customers are forced to promptly buy new tools as more roads are getting refurbished. Aurora (5% of sales), which provides HVAC systems for vehicles including buses, could benefit from investments in public transportation. Other companies such as Hauff-Technik (5% of sales), a provider of sealing systems for cables and pipes should benefit from new public buildings (hospitals, airports, universities). Although this list is by no means exhaustive, it gives an idea how Indus Holding ’ companies are affected on a broad basis and that they can profit significantly not only from infrastructure investments directly but also from the aftereffects for
the German economy as a whole.

We continue to like the stock and confirm Indus Holding as one of NuWays’ Alpha Picks. Reiterate BUY with an unchanged PT of € 34 based on FCFY’24e.

You can download the research here: http://www.more-ir.de/d/31934.pdf
For additional information visit our website: https://www.nuways-ag.com/research-feed

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.
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