Norcros – capital light, cash generative and recovering, the Number 1 bathroom products group’s shares, now 302p, have a broker's 479p TP

18.07.2025

The £272-capitalised Norcros (LON:NXR) is a group of market-leading brands that design and supply sustainable bathroom and kitchen products in the UK, Ireland and South Africa, in addition to selected export markets.

I am looking forward to a more positive Trading Update being issued ahead of the group’s AGM next Wednesday, 23^rd July, which should help to highlight just how undervalued this £270m-capitalised group is at the current 302p, despite the 10% price uplift in the last four days.

Group CEO Thomas Willcocks stated that:

"In the context of current market challenges, I am pleased with the performance over this period and excited by the significant opportunities that remain in the more resilient mid-premium market segments where we hold leading positions.

Our strategy is working and has momentum, building from a position of strength and scale as we actively leverage the customer and operational synergies within the Group.

Our continued progress across our four key strategic pillars is delivering as demonstrated by our operating margins in our core UK & Ireland markets moving above 15% for the first time.

Whilst we are beginning to see some early evidence of a level of confidence starting to return to the sector, especially in new build, we are not reliant on any major recovery to deliver further progress against our medium-term targets and as a result, the Board's expectations for FY26 remain unchanged.”

The Business

Employing some 2,000 people, the Wilmslow, Cheshire-based group is a market-leading supplier of high-quality, sustainable bathroom and kitchen products with operations primarily in the UK and Ireland and South Africa.

It is a well-established business with a successful track record of serving consumers, architects, designers, developers, retailers and wholesalers.

In the UK and Ireland, it operates under six brands: Triton, Merlyn, Grant Westfield, VADO, Croydex, and Abode.

While in South Africa, the company operates under four brands: Tile Africa, House of Plumbing, TAL, and Johnson Tiles.

Over the medium-term the group’s strategy is that it will actively evolve its model from a ‘holding company’ to an ‘endorsed brand model’ enabling collective leverage of its scale and growth accelerators, thereby maximising value creation.

The Equity

There are some 89,818,983 shares in issue.

The larger holders include JO Hambro Capital Management (10.09%), Perpetual (9.91%), FIL Investment Advisors (9.81%), Premier Fund Managers (9.01%), Canaccord Genuity Wealth (7.01%), River Global Investors (4.54%), Allianz Global Investors (4.53%), M&G Investment Management (4.31%), and JP Morgan Chase Bank (4.09%).

Broker’s Views

Analysts Andy Hanson and Charlie Williams, at Zeus Capital, has a sum of the parts ‘fair value’ of 479p on the group’s shares.

For the current year, he sees £372.8m sales, £39.2m profits, 32.7p earnings and a 10.6p dividend per share, followed by even better figures the year after, when he goes for £382.1, sales, £42.6m profits, 35.3p earnings and a 10.8p per share dividend.

Analyst David Buxton, at Cavendish Capital Markets, has Buy rating on the group’s shares, with a 340p a share Target Price.

His estimates for the current year to end-March 2026 are for revenues of £375.4m (£368.1m), with adjusted pre-tax profits of £38.6m (£36.5m), lifting earnings up to 33.1p (32.4p) and the dividend up to 10.5p (10.4p) per share.

For the 2027 year, he goes for £385.7m sales, £40.8m profits, 35.0p earnings and a dividend per share of 10.7p.

Analysts Toby Thorrington and Andy Edmond, at Equity Development, have a ‘fair value’ of 300p a share, while looking for £373.2m current year sales, £38.2m profits, 33.5p earnings and 10.6p dividend.

For 2027 they see £383.0m revenues, £40.3m profits, 35.3p earnings, and a 10.8p dividend.

In My View

I notice that the recent improvement in the group’s share price is just ahead of next week’s AGM Trading Update.

Hopefully,

that statement will help to indicate just how undervalued the equity is whilst trading at 302p, trading on just 9 times earnings and yielding some 4%.