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Real Consulting | Upward momentum carries on; headed for the Main Market

Robust FY’24 showcases execution capabilities, operational strength – RC’s FY’24 results in April confirmed our expectations for a strong end to the year, with the group successfully delivering €40.4m revenue (+34% yoy) and €7.3m adj. EBITDA (+45% yoy), on par with guidance. The results validated our view of strong execution throughout 2024, as mgt reported that all milestones across ongoing contracts were met within the allotted timeframe. Importantly, the performance highlighted resilient operating momentum, supported by a favorable mix shift towards higher-margin installation contracts and increased share-of-wallet growth across the existing installed base.

Domestic IT market in structural growth; high-quality pipeline ahead – RC is uniquely positioned to benefit from the structural transformation of the Greek IT market, leveraging its status as the leading SAP partner for Greece to deliver its wide range of enterprise solutions. RC’s focus on large companies and institutions ensures exposure to high-value projects, allowing the group to build a high-quality pipeline which we expect will drive recurring earnings growth through to the medium term.

Faster contract uptake drives upgrades to our mid-term estimates – We introduce marginal upgrades to our profit estimates, reflecting faster private sector contract uptake and continued execution of the Greek state pipeline. We now model c10% revenue CAGR over 2025-28e, supported by the substantial installed base and the IT upcycle tailwinds driving domestic sales. We note that our forecasts carry some upside risk given underlying trends (maturing SaaS adoption in Greece, increasing complexity of contracts under tender). We believe growth should remain private sector-led, supplemented by c€30m inflows from the two major state digitization contracts underway. As cloud-native platforms become a larger part of the offering and scale effects manifest in a more pronounced manner, we forecast c15% group adj. EBITDA CAGR over 2025-28e, with margins trending toward the 21-22% area by 2028e.

Cash generation supports Balance Sheet strength, allocation flexibility – RC maintains a healthy balance sheet, having closed FY’24 on net cash of €4.5m. Low capex needs (typical of VARs) combined with rising profitability and disciplined working capital management support strong OCF conversion, making RC well-positioned to consistently generate FCF of €7-8m p.a. through 2028e. Assuming no effects from M&A ahead, we believe Real Consulting should increase its net cash position to >€28m by 2028e.

Valuation – Following the recent rally, Real Consulting shares have rerated to c9.9x 2025e EV/EBITDA, marginally above EU VAR peers. Despite the re-rating, we believe the valuation remains attractive on a growth-adjusted basis, as REALCONS offers superior growth than peers, supported by an accelerating ARR base and clear potential for margin accretion ahead. Adding to the fundamental story, we believe the upcoming migration to the ASE Main Market could serve as a catalyst for further re-rating. After incorporating the slight upgrades to our estimates, our valuation (DCF at 9.3% WACC) now yields a PT of €5.6 per share (from €5.4 before). This places the stock at c10.3x 2026e EV/EBITDA, still at discount vs. the broad EU IT sector.