Stock Analysis & Valuation Fagerhult Group AB (0RQH.L)

• Previous Close: £37.80
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	1.60	-96
Intrinsic value (DCF)	16.85	-55
Graham-Dodd Method	0.60	-98
Graham Formula	0.80	-98

Strategic Investment Analysis

Company Overview

AB Fagerhult (publ.) is a leading global provider of professional lighting solutions, headquartered in Habo, Sweden. Operating under well-known brands such as ateljé Lyktan, iGuzzini, LED Linear, WE-EF, and Fagerhult, the company delivers high-quality indoor and outdoor lighting products for diverse applications, including offices, healthcare, retail, hospitality, urban spaces, and critical infrastructure. Founded in 1945, AB Fagerhult has built a strong reputation for innovation, sustainability, and energy-efficient lighting solutions. The company serves a global clientele, leveraging its multi-brand strategy to cater to various market segments. As part of the Industrials sector and Electrical Equipment & Parts industry, AB Fagerhult plays a crucial role in modern lighting technology, emphasizing smart and eco-friendly solutions. With a market capitalization of approximately SEK 7.4 billion, the company continues to expand its footprint in both established and emerging markets.

Investment Summary

AB Fagerhult presents a compelling investment case with its diversified brand portfolio and global market presence in the professional lighting sector. The company reported SEK 8.3 billion in revenue and SEK 354 million in net income for the latest fiscal period, demonstrating stable financial performance. Its strong operating cash flow of SEK 963 million supports ongoing innovation and market expansion. However, investors should note the company's total debt of SEK 3.97 billion, which could pose risks in a rising interest rate environment. The dividend yield, with SEK 1.4 per share, adds appeal for income-focused investors. Given its beta of 1.028, AB Fagerhult exhibits market-aligned volatility, making it a moderate-risk investment with growth potential tied to global infrastructure and smart lighting trends.

Competitive Analysis

AB Fagerhult competes in the highly fragmented professional lighting market, where differentiation is driven by innovation, brand strength, and sustainability. The company’s multi-brand strategy allows it to address diverse customer needs, from high-end architectural lighting (iGuzzini) to industrial applications (Fagerhult). Its focus on energy-efficient and smart lighting solutions positions it well in an industry increasingly driven by environmental regulations and IoT integration. However, competition is intense, with larger players like Signify and Acuity Brands dominating certain regions. AB Fagerhult’s competitive advantage lies in its specialized brands, strong European presence, and commitment to R&D. Yet, its smaller scale compared to global giants may limit pricing power and distribution reach in highly competitive markets like North America and Asia. The company must continue investing in digital lighting solutions and expanding its distribution network to maintain its competitive edge.

Major Competitors

• Signify NV (LIGHT.AS): Signify (formerly Philips Lighting) is the global leader in lighting solutions, with a strong presence in both consumer and professional segments. Its brand recognition and extensive R&D capabilities give it a competitive edge over AB Fagerhult. However, Signify’s broad product range may lack the specialized focus that Fagerhult’s niche brands offer.
• Acuity Brands, Inc. (AYI): Acuity Brands dominates the North American lighting market with a strong portfolio of smart and connected lighting solutions. Its technological leadership in IoT-enabled lighting poses a challenge to AB Fagerhult’s expansion in the U.S. However, Acuity has limited penetration in Europe, where Fagerhult holds a stronger position.
• Zumtobel Group AG (ZUMZ.VI): Zumtobel specializes in premium lighting solutions, competing directly with AB Fagerhult’s high-end brands like iGuzzini. While Zumtobel has a strong reputation in architectural lighting, its smaller scale and regional focus in Europe make it less diversified than Fagerhult’s multi-brand approach.
• Hubbell Incorporated (0QO8.L): Hubbell operates in electrical and lighting solutions, with a significant presence in industrial and utility lighting. Its broad product range and strong U.S. distribution network contrast with AB Fagerhult’s more specialized European-centric model. Hubbell’s larger scale provides cost advantages but may lack Fagerhult’s design-focused lighting expertise.