Severfield is the market-leading UK structural steelwork fabricator operating across a broad range of market sectors. An Indian facility undertakes structural steelwork projects for the local market in a joint venture with India’s largest steel producer, JSW Steel.
The primary strategic aim is to maintain Severfield’s position as the leading UK structural steelwork supplier. JSSL targets similar sectors to those served in the UK; management has valued the Indian construction market at c £100bn pa, with a very low penetration of steel structures currently.
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Adam Semple
CFO
Alan Dunsmore
CEO
Forecast net debt (£m)
30.1
Forecast gearing ratio (%)
13
% | 1M | 3M | 12M |
---|---|---|---|
Actual | 20.2 | 18.1 | 11.5 |
Relative | 16.9 | 10.5 | 6.2 |
52 week high/low | 75.0p/50.0p |
Severfield’s trading update indicates that FY23 results are expected to slightly exceed market expectations and Severfield ends the year with a record UK and Europe order book. Furthermore, with a positive trading outlook and net debt coming in lower than expected, the company has announced a £10m share buyback, highlighting the cash-generative nature of the company and management’s confidence in its position. The stock trades on an FY25 P/E of less than 6x and yields 7%, which we believe appears compelling.
Y/E Mar | Revenue (£m) | EBITDA (£m) | PBT (£m) | EPS (p) | P/E (x) | P/CF (x) |
---|---|---|---|---|---|---|
2022A | 403.6 | 33.4 | 27.1 | 7.00 | 9.7 | 5.2 |
2023A | 491.8 | 40.4 | 32.5 | 8.61 | 7.9 | 4.6 |
2024E | 482.9 | 45.0 | 35.2 | 8.73 | 7.8 | 4.1 |
2025E | 550.5 | 47.5 | 37.5 | 9.28 | 7.3 | 3.9 |