Norcros Company Research (NXR)

Margin progression, cash generation and dividend growth – as well as a material, post period end acquisition – were all notable features of H1 26. A sharpened and connected business portfolio with leading market positions, clear strategic growth drivers and demonstrable results are together delivering above sector performance against a generally subdued economic backdrop. The foundations are in place to continue to capture market share in a more favourable cyclical environment, though this is not currently factored in. The company’s share price has performed well YTD (+c.18%), c.5% ahead of the FTSE All-Share Index and comfortably ahead of most of its sector peers. However, the re-rating has been minimal due to the earnings-enhancing FIBO deal. Closing sector peer discounts and realistic DCF profit assumptions both support higher valuations for Norcros. Taking an average of these two methods generates our increased fair value of 397p per share (around 30% above current share price).