Legrand's Strategic Momentum in 2025: Datacenter Growth and Margin Resilience Drive Value Creation

Legrand (LGR.PA), a global leader in electrical and digital infrastructure solutions, has emerged as a standout performer in 2025, leveraging accelerating organic growth, strategic acquisitions, and an upward revision of sales targets to position itself as a top pick for infrastructure investors. With a 10% to 12% full-year sales growth target (excluding currency effects), up from an initial 6% to 10%, the company's execution in key sectors like datacenters and its focus on margin discipline underscore its potential for sustained value creation. Here's why investors should take notice.

Organic Growth Surge: H1 Momentum and Datacenter Dominance

Legrand delivered 9% organic sales growth in the first half of 2025, with acceleration to 10.1% in Q2, driven by its datacenter segment. This segment alone now accounts for 20% of 2024 sales (€1.8 billion pro forma), having grown at a 19% compound annual rate since 2019. The datacenter business is the engine of this growth, fueled by hyperscale cloud investments, AI infrastructure expansion, and edge computing demand.

Regional performance highlights North America's dominance, where organic sales surged 22% in Q2, driven by U.S. hyperscale projects. Europe's modest growth (+2.3% in Q2) reflects macroeconomic headwinds, while Asia-Pacific and Latin America show mixed results. Despite this, the global datacenter pipeline remains robust, with Legrand's high-margin solutions—such as power protection systems and interoperable infrastructure—locking in long-term contracts.

Acquisitions as Growth Multipliers

Legrand's strategic acquisitions in 2025 have amplified its datacenter footprint. The purchase of Performation (Netherlands) and Computer Room Solutions (Australia) added critical expertise in connected healthcare and datacenter cooling systems, respectively. These moves not only boost sales but also enhance margins, as acquired businesses typically operate at higher profit margins than Legrand's core operations.

The broader scope of consolidation contributed +5.5% to first-half sales growth, with acquisitions now accounting for ~5% of full-year targets. This pipeline of bolt-on deals positions Legrand to capitalize on secular trends in digital infrastructure while maintaining its 20.7% adjusted operating margin (Q1 2025).

Margin Resilience Amid Macroeconomic Challenges

While currency headwinds (a -2% drag in 2025) and geopolitical risks (e.g., U.S. customs policy shifts) pose headwinds, Legrand's cost discipline has shielded margins. The company has implemented selective price increases, optimized supply chains, and streamlined its industrial footprint. Management reaffirmed its 2024 operating margin stability for 2025, a key confidence builder for investors.

ESG Integration: A Sustainable Edge

Legrand's 2025–2027 CSR roadmap aligns its growth with sustainability goals, such as reducing carbon emissions by 30% by 2030 and achieving 100% recycled packaging. This ESG focus isn't just compliance—it's a competitive advantage. As institutional investors prioritize ESG-aligned companies, Legrand's leadership in green infrastructure solutions (e.g., energy-efficient datacenter cooling) strengthens its long-term appeal.

Investment Case: A Buy with Upside Potential

Legrand's revised targets reflect a +20% upside to its initial 2025 guidance, signaling confidence in its execution. With datacenter demand poised to grow at 15% annually through 2030 and its acquisition pipeline intact, the company is well-positioned to outperform peers.

Key Risks: Currency fluctuations and geopolitical disruptions remain concerns, but Legrand's diversified revenue streams and pricing power mitigate these risks.

Conclusion: A Top Pick in Digital Infrastructure

Legrand's combination of organic growth, strategic acquisitions, and margin resilience makes it a compelling investment in a sector primed for growth. With datacenter demand surging and ESG trends favoring sustainability leaders, investors should view dips in LGR.PA as buying opportunities. As the company heads into its July 31 results, the upward-revised targets and strong Q2 momentum suggest this could be the start of a multiyear outperformance cycle.

For infrastructure investors seeking a blend of innovation, scale, and ESG alignment, Legrand is a rare gem in today's market.

Disclaimer: This analysis is based on publicly available data and does not constitute financial advice.