AKYLA
Equity Research
Defense & Marine Robotics
Initiation of Coverage — BUY
Last Updated: June 28, 2026
Kraken Robotics Inc. (KRKNF)
Subsea defense robotics at the inflection: standalone guidance for >65% growth, the transformational Covelya deal closing July 2, and a clean path to ~2x by mid-2028. Reported in CAD; USD valuation view included.
Thesis
- Kraken is the pure-play arms supplier to the subsea-defense buildout. SAS sonar and pressure-tolerant SeaPower batteries are the payloads going into the exact UUV platforms governments are now funding at scale — US Navy Lionfish (REMUS 300, $347M ceiling / up to 200 vehicles), AUKUS Pillar II's first signature project (UUV payloads, delivering from 2027), NATO Baltic Sentry cable defense and the EU's ~EUR1B cable-security package. The UUV market itself is modeled at a 22.7% CAGR to $19.2B by 2031. Kraken sells the picks-and-shovels into that wave.
- The fundamentals already inflected. FY2025 revenue grew 11.9% to C$102.2M at a 62.1% gross margin and C$25.0M adjusted EBITDA (24.4% margin); Q1 2026 accelerated to +35% YoY (C$21.7M) with 2026 product orders already at C$97M. Management guides FY2026 standalone revenue to C$165-175M and adj. EBITDA to C$40-50M — 'over 65%' revenue growth and '80%' EBITDA growth at the midpoint.
- Covelya is the step-change. The C$615M acquisition (closing ~Jul 2, 2026) bolts on Sonardyne, EIVA, Forcys, Wavefront, Voyis and Chelsea Technologies — roughly C$249-275M of additional 2025E revenue at a 24% EBITDA margin. Combined, Kraken becomes a ~C$350-380M revenue / ~C$85-90M EBITDA business with a >C$262M visible order book at just 0.8x post-close net leverage.
- PATH TO 2x (by mid-2028): the combined entity compounding ~20%+ organically into 20%+ CAGR end-markets takes pro-forma 2027-28 revenue toward ~C$520M at ~26% EBITDA margin (~C$135M). Holding a defensible EV/Revenue in the ~7-8x band (vs. PNG's current ~18-19x P/S and defense-tech comps at 4.6-5.4x EV/Rev but higher growth here) bridges from today's ~C$2.0B cap to ~C$4.0B — roughly a double, implying ~C$13/share. Analyst average target is ~C$10.8 (high C$14), consistent with the double on trajectory delivery.
- Risk is concentrated and nameable: material dilution (47.3M bought-deal subscription receipts @ C$8.50 + C$135M stock to the Covelya seller take fully diluted to ~385M shares), integration risk across 12 facilities / ~750 added staff, and a ~18-19x P/S that leaves little room for slippage. Ratings are genuinely mixed (Scotiabank/Raymond James Outperform vs. ATB Cormark Strong Sell). We size the position accordingly but stay long.
Q1 FY27 Earnings Snapshot
Disclaimer
This is not financial advice.
This report is for informational purposes only and is not investment advice. Kraken reports in CAD; the USD valuation view uses the packet's 1.42 USD/CAD rate. Figures marked kind='estimate'/'computed' are Akila analyst derivations, not company-reported figures; FY2027/28 combined projections and the ~385M fully diluted share count are estimates and are not company-confirmed. Covelya 2025 revenue/EBITDA are company estimates from the acquisition release. Akila Advisory is LONG KRKNF.
The Q1 2026 print confirmed the acceleration thesis. Revenue of C$21.7M grew 35% YoY off C$16.1M — a step up from FY2025's 11.9% full-year pace — split C$13.8M product / C$7.9M services. The optics on margin are softer (gross margin 56% vs. 62.1% in FY2025, adj. EBITDA margin 14% vs. 24.4%) and the company posted a C$3.3M net loss (-C$0.01 diluted), but those line items are dominated by Covelya transaction and financing costs and the seasonal first-quarter mix; management held full-year guidance of C$165-175M revenue and C$40-50M adjusted EBITDA, framed as 'over 65%' revenue growth and '80%' EBITDA growth at the midpoint. The signal that matters most is order intake: 2026 product orders already stood at C$97M at the Q1 release, with SeaPower battery order cadence of US$35M (Jan) and US$28M (Apr) and a new Nova Scotia plant lifting battery capacity toward ~C$200M/yr. Cash was C$108.7M at March 31 (down from C$120.5M at year-end on C$30.3M FY2025 capex and deal costs), before the C$402.5M bought deal closes into the balance sheet. This is a company being pulled, not pushed, by demand.