Legrand S.A.LR:EPA

Legrand is a major global player in electrical and digital building infrastructure, offering a diverse portfolio of solutions across residential, commercial, industrial and datacentre end-markets. In 1Q26, the group delivered 11.4% YoY sales growth, with a 20.7% adjusted operating margin. Legrand combines stable cash generation with favorable structural tailwinds, notably through its growing exposure to datacentres and AI-related infrastructure demand. The business model is attractive, but the market seems to have already priced in very strong execution of the group’s roadmap. At the current valuation, we believe Legrand is a high-quality company, but not an attractive entry point. Consequently, we assign a Sell rating with a price target of 134, based on our DCF valuation, using the average of our Gordon Growth (125) and Exit Multiple (143) approaches.

Investment Thesis

• Constructive Sell. We acknowledge the quality of Legrand’s business, its strong execution track record in terms of M&A, and its attractive positioning in datacentre infrastructure.

• Demanding market expectations. We believe the market has already priced in much of this upside and now expects close to flawless delivery.

• Key risk. As datacentre infrastructure becomes more attractive, rising acquisition multiples could reduce value creation per euro invested.

At the current valuation, we foresee a risk that future value creation becomes increasingly dependent on flawless execution in datacentres and capital allocation.

Valuation

Our 134 target price is based on a 10-year DCF, using the average of our Gordon Growth and Exit Multiple approaches. Peer multiples are used as a cross-check only. The DCF is based on a WACC of 8.29%, which consists of a cost of equity of around 8.98% and a cost of debt of around 3%.

Full note and exhibits in the PDF above.