When screening Croatian blue chips by P/E ratio, the numbers can tell a very different story from the one playing out on the balance sheet. Several CROBEX10 constituents are sitting on substantial net cash positions that the headline multiple completely ignores, while others carry debt loads that make an apparently modest valuation look less attractive on closer inspection. Therefore, we cut through the surface-level screening and look at what investors are actually paying for – the operating business, not the balance sheet.
The P/E is one of the most instinctively understood multiples in equity investing – divide the market cap by annual earnings, and you get a rough sense of how many years of profits you’re paying for. Simple enough. But taken at face value, it can also be misleading, particularly for companies that carry significant cash or debt on their balance sheets.
That’s where the cash-adjusted P/E comes in. The adjustment is straightforward – net debt is added to the market cap before dividing by earnings, leaving a cleaner picture of how the market prices the core business, stripped of balance sheet noise. It is worth noting that net debt used in this analysis is defined as total interest-bearing financial debt minus cash, cash equivalents, and short-term financial assets such as term deposits and similar instruments. Additionally, HPB is excluded from this analysis as applying net debt mechanics to a bank whose balance sheet is fundamentally structured around financial liabilities and assets as core business inputs rather than leverage would produce figures that are more misleading than illuminating.
P/E ratios of selected CROBEX10 constituents (price from 27 March 2026, FY 2025 earnings)
Source: Companies’ data, InterCapital Research
Looking at FY 2025 results across nine CROBEX10 constituents, valuations span a wide range. At the cheaper end sit AD Plastik at 7.0x and Podravka at 8.0x, although the adjusted P/E for Podravka would be closer to 14.5x if we exclude the one-off negative goodwill impact from the acquisition of Agri companies. In the middle, the two Končar companies trade at 13.1x-13.2x, while Žito comes in at 14.2x. More expensive names on a headline basis are Valamar Riviera at 18.1x, Adris at 20.0x, and Atlantic Grupa and Hrvatski Telekom Group, both just above 20x. But headline multiples don’t tell the whole story.
Net debt as a % of market capitalization (price from 27 March 2026, FY 2025 net debt)
Source: Companies’ data, InterCapital Research
This is where the picture gets more interesting. Among the nine companies, four carry net cash positions. The Končars lead the way, with KOEI holdings EUR 347m in net cash and KODT EUR 275m, reflecting years of accumulated operating profits that have not been fully redistributed to shareholders, paired with low indebtedness and readiness for capacity expansion. These are not idle net cash positions by accident; the cash provides both the flexibility to pursue inorganic growth and the buffer to sustain that investment cycle without significantly tapping debt markets.
HT follows with EUR 88m in net cash, a figure that understates the Group’s cash generation capacity, as HT has consistently used its strong free cash flow position to support one of the most generous dividend policies among Croatian blue chips, coupled with significant share buyback programs. Žito rounds out the net cash group, a notable entry among the heavyweights after the large cash inflow from their last year’s IPO.
Adris sits at near-zero net debt that is essentially negligible relative to its EUR 1.6bn market cap. It is worth noting that Adris’ balance sheet analysis excludes the financial assets and investment portfolio associated with Croatia osiguranje, as consolidating insurance-specific financial instruments into a standard net debt framework would overstate their cash position.
On the other side of the ledger, Atlantic Grupa carries EUR 235m in net debt, a reflection of its acquisition-driven regional expansion across food and beverage brands. Valamar Riviera’s EUR 344m is consistent with the capital intensity of its hotel development pipeline, as the Group has been one of the most active investors in Croatian tourism infrastructure over the past decade, and its leverage is largely a function of growth ambition rather than operational stress. Podravka’s EUR 381m is the most notable, driven by both ongoing capital investments and the financing of its own acquisitive growth strategy.
Cash-adjusted P/E ratios of selected CROBEX10 constituents (price from 27 March 2026, FY 2025 financial data)
Source: Companies’ data, InterCapital Research
Once the balance sheet adjustment is applied, several names look materially different. The Končar companies are the standout cases. KOEI’s adjusted multiple drops from 13.1x to 10.7x, and KODT from 13.2x to 11.3x. The multiples, already attractive relative to industry peers, carry further discount once the adjustment is applied, and it becomes even more significant when you consider that the cash is increasingly less inert as they begin to accelerate their capex cycle. HT tightens more modestly, reflecting a smaller net cash position relative to market cap, but it is also worth noting that HT is an industry anomaly, as telecommunications is an asset-heavy sector typically accompanied by significant leverage. Žito also moves in the favorable direction, from 14.2x to 13.5x.
At the other end, the leveraged names see their multiples expand. Podravka moves from 8.0x to 10.8x, or from 14.5x to 19.6x using adjusted earnings. Valamar Riviera is the most striking case in the group, jumping from 18.1x to 25.9x, a direct reflection of how heavily debt-financed its growth model is – typical for the hospitality industry. Atlantic Grupa similarly moves from 20.5x to 27.8x, making it one of the pricier names in the index on an adjusted basis, but it should also be noted that the earnings base is weighed down due to severe conditions on the coffee and cocoa markets in the past couple of years. AD Plastik shifts to 8.8x, while Adris remains essentially unchanged at 20.0x given its negligible net debt position.
Plain P/E numbers are a useful starting point, efficient for screening, easy to communicate, and good enough for a first-pass comparison. But they are a blunt instrument in a world where balance sheet structures vary considerably across what appear to be similar companies. The real edge in valuation work – the alpha, if you will – comes from looking under the hood. Net cash positions, capital allocation histories, or the strategic rationale behind leverage show not only the valuation but the risk profile of each company as well. The numbers on the surface are where analysis begins – but not where it ends.