This week, we present the 2025 forward P/E multiples of CROBEX10 constituents, as will be available in our daily trading multiples report from tomorrow. For 2025, we anticipate a contraction in P/E multiples, driven by average net income growth of 9 out of 10 index constituents. Consequently, we view the index as undervalued at current levels.

Firstly, it is important to note that the forward valuation multiples presented here are based on 2025 net income attributable to majority shareholders, as estimated by InterCapital Research or the companies themselves. At the same time, current share prices are used for calculations. As share prices will inevitably fluctuate throughout 2025, these multiples will be updated accordingly.

For Croatia’s CROBEX10 index, we expect an improvement in the P/E ratio, from the current 13.1x to 11.2x by the end of 2025. This reflects earnings growth in 9 out of 10 index constituents, based on unaudited 2024 results.

Current and forward 2025 P/E multiples of CROBEX10 constituents

Source: Companies’ data, InterCapital Research

Starting with the largest company by weight in the index, for Hrvatski Telekom we anticipate a modest increase in net income attributable to the majority, reaching approximately EUR 144m, aligning with the Company’s outlook, which projects low single-digit growth in both revenue and operating profitability. Profitability remains constrained by the ongoing investment cycle, expected to continue until 2027, with a strategic focus on phasing out legacy systems and expanding 5G and fiber infrastructure. Beyond this period, profitability should see a more pronounced improvement, as these next-generation technologies inherently offer higher margins. Additionally, while employee benefits will continue to exert above-average pressure on profitability, their impact is expected to moderate compared to the past two years.

Next is Končar for which, following a remarkable 120% surge in net income, we anticipate a more moderate, yet still robust, double-digit growth amounting to approximately EUR 130m. Therefore, we find Končar well-positioned, supported by a substantial backlog projected to reach EUR 2.1bn in 2025 according to the Group’s Business Plan. While profitability remains strong, a slight normalization of margins is expected as the Group transitions from fixed-price contracts to variable pricing structures, ensuring greater flexibility and margin protection.

Net income for Podravka is projected to increase to approximately EUR 100m, primarily driven by the consolidation of agricultural companies acquired from the Fortenova Group. Additionally, the Company stands to benefit from efficiency gains and the monetization of substantial investments made in recent years, further strengthening operational performance and profitability.

As Valamar Riviera continues shifting its product mix toward the higher-end segment, its operations are becoming more increasingly resilient to potential downturns in overall tourist arrivals. Also, current outlook for 2025 tourist season remains strong, potentially even surpassing the previous year’s performance. Therefore, despite rising cost pressures and continued investment expenditures, we expect a modest improvement in net income, reaching approximately EUR 26.3m, supported by premium pricing strategies and operational efficiencies.

A similar outlook applies to Adris Grupa, particularly in its tourism segment led by Maistra and HUP-Zagreb. Meanwhile, the insurance segment, driven by Croatia osiguranje, is expected to see profitability improvements, supported by higher gross written premiums, ongoing digitization efforts and robust investment income. Collectively, these factors should contribute to enhanced overall profitability for the Group, amounting to approximately EUR 70m.

Next is Končar D&ST, a key subsidiary within Končar Group, who delivered outstanding results in 2024 and we expect further earnings growth in 2025, with net income reaching approximately EUR 140m. As a key contributor in Power Transmission and Distribution, the Group’s most significant revenue segment, Končar D&ST remains a key driver of Končar’s overall financial performance.

Moving on to Atlantic Group, the Company’s management gave guidance for 2025, expecting sales to grow to EUR 1.2bn, though profitability pressures remain due to the sharp increase in raw coffee and cocoa prices. However, hedging strategies covering around half of the Company’s raw coffee and cocoa inputs, along with the full-year consolidation of the Strauss acquisition, should partially offset margin pressures. As a result, we forecast moderate net income growth, reaching approximately EUR 28.7m.

For HPB, net interest income is expected to continue growing, primarily due to loan volume expansion, as interest rates decline further. At the same time, net fee and commission income is expected to increase, reflecting higher fees in response to new banking regulations. However, cost pressures and a deteriorating macroeconomic environment – which will likely drive higher provisions – are expected to result in slightly lower net profitability, estimated at EUR 72.8m.

Ericsson NT experienced a sharp decline in net profit in 2024, primarily due to the non-renewal of a managed services contract with HT, which led to lower sales. Additionally, a one-time tax expense, stemming from a retrospective change in the interpretation of cost eligibility for tax deductions, further weighed on earnings. However, in 2025, we anticipate a moderate recovery in net income to approximately EUR 16.8m, as similar one-off impacts are not expected.

Finally, Span reported a threefold increase in net profit in 2024, driven by both revenue expansion and margin improvements. This growth reflects the return of Ukraine-related operations to the P&L, signalizing a normalization of business activities. Additionally, the strong performance of high-value-added segments further contributed to improved profitability. Looking ahead to 2025, we anticipate continued strength in high-value-added segments and further net profit growth, amounting to approximately EUR 4.3m.

CROBEX10 constituents earnings growth estimates (2024 vs 2025E, %)

Source: Companies’ data, InterCapital Research