After a strong performance on the Romanian equity market since last May, the investment climate appears supportive for the first IPO of the year – Electro-Alfa International [EAI RO]. Investor attention around the deal has been intense, with the Company often referred to as the “Romanian Končar”. The comparison is not accidental, but how close is it in reality?

Electro-Alfa International is one of Romania’s leading electrical equipment and electrical engineering companies, with more than three decades of experience in the design, engineering, and production of customized electrical infrastructure solutions. The Company operates a vertically integrated business model, spanning R&D, fabrication, EPC execution, and maintenance. Its platform combines factory-based production with turnkey project delivery, offering an end-to-end electrical engineering solution.

The Company delivers certified low- and medium-voltage systems, customized substations, and smart electrical solutions across the energy value chain (generation, transmission, distribution), as well as fast-growing segments of the energy transition, including renewable generation and energy storage projects.

Beyond core electrical equipment, Electro-Alfa provides electrical systems for a broad range of industrial and infrastructure applications, serving oil & gas, heavy industry, and large manufacturing facilities. It is also active in transport infrastructure, supplying solutions for metro and tram systems, mainline rail, highway digitalization projects, civil-construction and general-contracting projects with electrical solutions for industrial, logistics, and agricultural facilities.

From a market standpoint, Electro-Alfa holds roughly one-third of the Romanian electrical equipment market, while exports account for approximately 20-25% of revenues, with meaningful exposure to the US and Ukraine, alongside other international markets.

There are clear similarities with Končar in terms of vertical integration, EPC exposure, and infrastructure focus. However, one important distinction remains the transformer business. Electro-Alfa does have a JV with SGB-SMIT Group, a German transformer manufacturer. This JV is strategically relevant, but the transformer activity is not yet a proven earnings contributor, and its financial impact (through dividends) will only become visible once operations scale and profitability is achieved, expected in the coming years.

Electro-Alfa Historical and Estimated Financials (RONm)

Source: Company’s data, InterCapital Research

The financials show strong topline momentum, with revenues increasing from RON 259.2m in 2022 to RON 648.4m in 2024, while H1 2025 revenues reached RON 307.8m, representing 11% YoY growth. Over the same period, profitability margins have remained broadly stable and defensible, reflecting disciplined project execution despite cost pressures.

Moving on to the IPO details, the deal consists of 65.99m newly issued shares at a price range of RON 8.35-8.85, resulting in a post-IPO share count of 188.5m shares and gross proceeds of approximately RON 580m at the top of the range. Post-IPO, the free float will amount to 35%, while founder Gheorghe Ciubotaru will retain 52% directly and 13% indirectly via Electro Alfa Management.

The subscription period was initially scheduled to run from 2 to 11 February, with allocation on 12 February and settlement on 17 February. However, following exceptionally strong investor demand (double-digit oversubscription), the book was closed early last Friday, with allocation brought forward to 9 February and settlement to 12 February. Trading is expected to commence in early March, subject to final regulatory approval.

The offering was split into two tranches:

• Retail tranche: initially 10% of the deal (6.6m shares), with subscription at a fixed price of RON 8.85, but retail investors subscribing in the first four days benefit from a 5% discount on the final offer price,
• Institutional tranche: 90% of the offering, with pricing within the full range.

The final tranche split may be adjusted depending on demand, with the retail tranche potentially increasing up to 15% in case of strong retail participation.

Based on pre-IPO share capital and FY 2024 financials, the implied valuation corresponds to a 13.1x-13.9x EV/EBITDA range and 17.8x-18.9x P/E. On a fully diluted post-IPO basis, using FY 2025 estimates, the P/E multiple increases to 18.5x-19.6x, while EV/EBITDA declines to 9.4x-9.9x, driven primarily by strong EBITDA growth in 2025, with the net cash position immediately following the IPO representing a listing-date snapshot, prior to the deployment of IPO proceeds.

For 2025, we used the Company’s estimated RON 827m of revenues and RON 114m EBITDA, while net profit is derived using the 2025 net profit-to-EBITDA ratio and the 2025E EBITDA. Net cash is calculated as the H1 2025 position plus estimated net IPO proceeds.

Electro-Alfa Implied Valuation Multiples (EV/EBITDA on the left, P/E on the right)

Source: Company’s data, InterCapital Research

IPO proceeds are skewed toward M&A and strategic expansion. Identified acquisition targets include Elcomex (99.99%), Spiact Craiova (51%), and Electro Alfa CM (33%). Elcomex strengthens exposure to nuclear power EPC projects, Spiact reinforces the railway infrastructure vertical, while Electro Alfa CM deepens vertical integration and strengthens metal enclosures production.

Beyond M&A, organic growth priorities include capacity expansion, development of battery energy storage systems (BESS), support for large infrastructure projects, and selective expansion into Ukraine and Moldova, alongside monitoring opportunities in Western Europe.

Also, Electro-Alfa intends to distribute at least 30% of its annual consolidated net profit starting with the first financial year following the IPO. Based on 2024 earnings and mid-range pricing, this implies a ~1.0% dividend yield, with upside potential as earnings scale.

Overall, this IPO has attracted strong interest due to Electro-Alfa’s robust historical growth, exposure to EU-funded infrastructure, above-average growth prospects across its end markets, and optionality from Ukraine’s reconstruction. At the same time, expectations around inorganic growth elevate integration and execution risks, while supply-chain volatility, input-cost pressures, project execution discipline, and customer retention remain key operational risks that are largely structural to the sector.

For those who want to know more, you can access the Prospectus on the following link.