Deep|INIO: A Gas Engine Leader in the BTM Power Supercycle, with a Long Service Tail

Executive Summary

• We are expanding our BTM power coverage to INNIO (INIO), a leading reciprocating-engine OEM in North America and Europe, following our initiations on BE and FTAI. Since its June 2026 IPO, the forward EV/EBITDA multiple has declined from a post-IPO peak of ~24x to a recent low of ~12x, despite two consecutive quarters of results that beat expectations and higher guidance. Equipment backlog reached ~$8bn, while the book-to-bill ratio reached ~3.3x.
• Compared with other BTM power providers, we believe INNIO’s key advantage is its ~44GW installed base, which supports service relationships that can last 10–15 years. Aftermarket services now account for roughly one-third of sales. We estimate that 15-year service EBITDA per GW could reach 2.3x the initial equipment EBITDA, or 1.5x on a discounted basis. Our 2025–30 model implies revenue CAGRs of 39% for Equipment and 11% for Services, with EBITDA growing at 46% and 12%, respectively.
• Equipment margin expansion is expected to come from higher volumes and operating leverage. We model Equipment EBITDA margin rising from ~15% in FY25 to ~19% by FY28 as deliveries grow faster than SG&A and R&D, without further price increases. Channel checks indicate 20–30% price premiums on some data center orders. Sustaining margins will depend on whether better cost absorption can offset pricing pressure as competitors add capacity.
• Setup: The November 30 lock-up expiry will make 646.5mn sponsor shares eligible for sale, equivalent to ~86% of shares outstanding and ~6.2x the current public float. This creates a potential supply overhang, although actual selling remains uncertain. Catalysts include the Q4 delivery ramp, FY27 guidance, capacity updates and conversion of reservations into firm orders. Channel checks point to a healthy customer pipeline; further customer announcements and upward revisions to service revenue expectations could support a rerating.

Why Now

Following our initiations on BE and FTAI, we are expanding our BTM power coverage to INNIO (INIO), a leading reciprocating-engine OEM in North America and Europe. Its forward EV/EBITDA multiple has declined from a post-IPO peak of ~24x in early June to ~14x. The multiple has compressed despite a strong 3Q26 beat and raised guidance, with Equipment backlog reaching ~$8bn and data centers accounting for ~80% of the new order intake. INNIO’s ~44GW installed base provides a foundation for future Services growth. With the IPO lock-up expiring on November 30, potential sponsor selling remains a near-term overhang. We see an opportunity to assess the business as demand and deliveries ramp.