Stelrad Group – a positive AGM Update illustrates low rating for this group’s market dominance, providing opportunity for shares to radiate, now 140p, TP 215p

22.05.2025

Yesterday’s AGM Trading Update from the Stelrad Group (LON:SRAD) was positive and analyst reaction confirms that the company’s shares are undervalued.

The group, which is Europe’s leading specialist radiator manufacturer, sells an extensive range of hydronic, hybrid, dual fuel and electrical heat emitters to more than 500 customers in over 40 countries.

These include standard, premium and low surface temperature (LST) steel panel radiators, towel warmers, decorative steel tubular, steel multicolumn and aluminium radiators.

Management Comment

CEO Trevor Harvey stated that:

"Stelrad has made a solid start to the year, with trading in line with expectations.

This performance, achieved against a challenging macroeconomic background, is a testament to the strength and resilience of our operating model and the depth of experience within our leadership team in navigating complex market cycles.

With our strong market positions and structural tailwinds from decarbonisation, we remain confident in our ability to deliver further progress, drive market share gains, and provide long-term value for all stakeholders."

The Business

Stelrad is headquartered in Newcastle upon Tyne and in 2024 employed 1,400 people, with manufacturing and distribution facilities in Çorlu (Turkey), Mexborough (UK), Moimacco (Italy) and Nuth (Netherlands), with further commercial and distribution operations in Kolding (Denmark) and Krakow (Poland).

The group's origins date back to the 1930s and Stelrad enjoys long established commercial relationships with many of its customers, having served each of its top five current customers for over twenty years.

The company has five core brands: Stelrad, Henrad, TermoTeknik, DL Radiators and Hudevad. 

Stelrad has extended its market leadership position, with over 20% share by volume of the combined UK, European and Turkish steel panel radiator market. 

It is the leader in the following markets - UK with 53% of the market, top in Denmark (49%), Netherlands (48%), Ireland (38%), France (35%) and Belgium (34%).

The company also holds strong market share positions elsewhere in Europe – Sweden (22%), Germany (18%), Poland (11%) and Turkey (8%).

In 2024 the group sold 4,823,000 radiators, with each contributing £20.15 to the group.

The Group’s Key Medium-Term Targets

It is looking to improve its overall market share by up to 2%.

It is expected that each radiator will contribute £21.00 to the group.

The operating profit margin is aimed at 13%, with an operating cash flow conversion of some 90%.

Overall, it is aiming for a 30% return on capital employed.

The Equity

There are 127,352,555 shares in issue.

Larger holders include Bregal Capital (49.55%), Trevor Harvey, CEO (9.00%), Chelverton Asset Management (5.34%), Premier Fund Managers (5.11%), Janus Henderson Investors (4.46%), Moneta Asset Management (4.26%), Unicorn Asset Management (3.66%), and Lombard Odier Asset Management (3.35%).

Broker’s View

Analyst Greg Poulton, at Singer Capital Markets, rates the group’s shares as a Buy, with a 215p Target Price.

The analyst considers that:

“The AGM update confirms a strong start to FY25, with year-to-date trading in line with expectations.

This reflects continued proactive margin management and ongoing cost discipline.

The risk of exposure to any US-related steel tariffs is low, with the radiator market oriented towards Europe and Stelrad’s longstanding supply chain relationships sitting outside of North America.

The group’s progress year to date reinforces its confidence in the full year outlook.”

His estimates for the year to end-December 2025 show £296.5m (£290.6m) revenues, with adjusted pre-tax profits of £26.3m (£23.5m), lifting earnings to 14.3p (12.9p) and paying a dividend of 7.95p (7.79p) per share.

For the 2026 year, he aims for £307.3m sales, £28.9m profits, 15.9p earnings and a dividend of 8.10p per share.

Jumping into 2027, Poulton’s figures suggest £318.4m turnover, £31.6m profit, with 17.5p of earnings covering a dividend of 8.27p.

My View

I would like to see the shares of Stelrad moving forward ahead of the group announcing its interim results on Friday 8th August.

Its shares, at 140p, are undervalued, trading on just 10.8 times historic earnings, 9.79 current year earnings and just 8.8 times prospective.

And it yields 5.7% - cheap!

I now set a Target Price of 175p.

Capable of making 6m radiators a year

(Profile 22.05.25 @ 140p set a Target Price of 175p)