DF Capital – Q1 Update shows even greater strength, shares moving forward, now 59p, TP 90p

Mark Watson-Mitchell - 08.04.2026

Following on from my article yesterday on DF Capital (LON:DFCH), the finance group has today issued a Trading Update for its First Quarter to end-March this year.

The £96m-capitalised group is based upon a specialist bank that provides financial solutions that support manufacturers, dealers and distributors across the UK.

Its Update described that its momentum in lending continued with strong portfolio quality.

The news created a forward impetus for its shares, up 5p to 59p in the first few hours of dealings.

The Business

DF Capital is a speciality lender providing flexible financing solutions that support the sales and growth of manufacturers, dealers and distributors operating in attractive underserved retail markets across the UK.

As a bank, its lending is underpinned by its award-winning savings products, straightforward digital platform, and exceptional customer service.

First Quarter Trading Update

The business reported a strong first quarter for 2026, with new loan origination reaching a record £469m, a 23% increase year-on-year, and the loan book growing to approximately £895m, up 26%.

The company's retail deposits surpassed £1bn for the first time, and its asset finance product saw a 40% increase to £21m.

The group’s portfolio quality remains robust, with total arrears and loan balances in legal recovery at 0.6% of the loan book, a decrease from 0.9% at the end of 2025.

Importantly, the company stated that it has not observed any immediate systemic impacts from the current economic climate.

Management Comment

CEO Carl D'Ammassa stated that:

"It is pleasing to report strong ongoing momentum in lending since the start of the year, demonstrating continued progress against our 2028 and 2030 targets.

Whilst the macro-economic and geo-political environment remains uncertain, we are well positioned to navigate this, providing appropriate support - where needed - to our diversified customer base, whilst also drawing on our deep expertise and strong credit stewardship as demonstrated through the economic cycle and most relevantly since authorisation as a bank in 2020."

Broker’s View

Analysts Rae Maile and Ross Luckman, at Panmure Liberum, reiterated their Buy rating on the group’s shares with a 90p Target Price.

“Having reported an excellent set of full-year results just two weeks ago, we had not anticipated any surprises in the Q1 update.

It is therefore reassuring to see that the strong momentum has continued into the new year with further loan book growth driven by another record period of originations.

While the macroeconomic environment remains uncertain, we continue to believe DFC’s specialist focus and deep customer relationships ensure it is well placed to navigate these challenges and deliver on its medium-term targets.

With the PER less than 7x for the current year and the P/TNAV just 0.7x, we believe the rating fails to reflect the company’s existing delivery, let alone its potential. BUY.”

The analysts went on to say that:

“We have made no changes to estimates at this stage given that it is still very early in the new year and, clearly, the macro environment has become more challenging over the last month.

That said, with the company’s track record of outperformance and the strong momentum continuing into Q1/26, we believe our estimates remain well underpinned.

At the prevailing price the PER for the current year is under 7x, falling to under 6x next year, and the shares trade at just 0.7x 2025’s reported TNAV.

With the scope for further material growth in PBT over the next five years, we believe that the shares remain materially undervalued.”

For the current year to end-December, on a closing group loan book of £905.1m (£846.4m), the analysts look for the group to show underlying pre-tax profits of £19.4m (£18.1m), with diluted earnings of 8.1p (7.8p) per share.

For the 2027 year, their estimates are for a closing group loan book of £1,029.9m, with £23.8m profits and 10.0p of earnings per share.

SQC Research View

This is a very pleasing Q1 Update, which, when coupled with the Broker Views, clearly shows why the shares of the group are cheap at the current 59p.

(Profile 08.04.22 @ 41p set a Target Price of 51p*)

(Profile 30.05.25 @ 39p set a Target Price of 49p*)

(Profile 11.09.25 @ 55p set a Target Price of 69p)

mark@sqcresearch.com