Deutsche Numis note11 Jul 2025 09:28
Recent note ….
SSP Group {Ticker: SSPG.L, Closing Price: 173.80 GBp, Target Price: 285.00 GBp, Recommendation: Buy}
Click here for the Model
TFS IPO set to price on 14th July
The price range for Travel Food Services (TFS, where SSP owns 49%) has been set, with a market cap range of £1.17bn to £1.23bn. The implied P/E ratio based on diluted EPS for fiscal 2025 (y/e Mar 25) at the lower end of the price band is 38x and at the upper end is 40x. The business has a small net cash position and we estimate an implied EV/EBITDA of 25x at the midpoint.
Assuming the upper end of the price band range, the Kapur Family Trust would also sell shares in the proposed IPO that represent up to 13.81% of TFS’s issued share capital.
As set out previously, SSP will not sell down in the IPO, but purchase additional shares in TFS (representing 1.01% of TFS’ issued share capital) for a consideration of approximately £12.5m; following completion of the purchase, SSP will hold 50.01% of TFS’ issued share capital.
Valuation implications and conclusion
The implied valuation for SSP's stake, at the midpoint, is c.£600m or 75p per SSP share. This leaves the core at 100p or a highly undemanding c.8x P/E for FY26. In EV/EBITDA terms the equivalent is c.4.4x.
We view it as positive that the inherent value in SSP's Indian business will now be more transparent. The structural growth in Indian aviation, as well as the JV's strong position in airport lounges, has made this an important part of SSP's growth. With SSP trading on an FY25 P/E of 13.9x and EV/EBITDA of c.6x, there is a clear valuation arbitrage that should represent a catalyst for a rerating.
Sign In
Follow the stocks
