Market Cap£167m

Last Close 187.5p

Norcros is a leading supplier of showers, enclosures and trays, tiles, taps and related fittings and accessories for bathrooms, kitchens, washrooms and other commercial environments. It has operations in the UK and South Africa, with some export activity from both countries.

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Investment summary

Strong trading in FY22 resulted in record revenue of £396m. The UK grew strongly, up 16.6%, driven in particular by Merlyn which grew 35% y-o-y. Growth in South Africa was stronger still at 34%. We expect these patterns to reflect market share gains in South Africa arising from relatively robust supply chain management and some normalisation of UK RMI demand. The acquisition of Grant Westfield extends Norcros’s UK product portfolio into panels and was expected to enhance earnings by c 10% in its first full year. The H1 trading update confirmed that Norcros anticipates achieving existing management expectations for FY23. We value the shares at 314p, offering material upside. We will update our forecasts following the interims, due to be released on 9 November.

Y/E Mar
Revenue (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2021A 324.2 39.2 27.4 29.58 6.3 3.9
2022A 396.3 47.0 38.6 37.99 4.9 3.2
2023E 450.8 54.3 43.2 38.45 4.9 2.9
2024E 485.9 59.8 47.3 39.67 4.7 2.8
Industry outlook

In the UK housing market’s recovery phase from the impact of the COVID-19 pandemic, RMI has clearly been the stronger sub-sector. UK newbuild fundamentals remain favourable also. Similar trends have been seen in South Africa. The commercial sub-sectors generally remain subdued.

Last updated on 30/11/2022
Content on Norcros
Norcros – Key strengths undervalued, legacy issues fixed
Industrials | research Update | 20 July 2022
Norcros – Broadening the UK bathroom product offering
Industrials | research Update | 17 May 2022
Norcros – Record revenue and EBIT in FY22
Industrials | research Update | 21 April 2022
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Share price graph
Balance sheet
Forecast net debt (£m) 50.6
Forecast gearing ratio (%) 21
Price performance
Actual 4.2 (11.6) (36.4)
Relative* (2.5) (14.4) (38.2)
52-week high/low 327.0p/165.0p
*% relative to local index
Key management
Nick Kelsall CEO
James Eyre CFO