discoverIE Group — Organic revenue and order growth resumes

discoverIE Group (LSE: DSCV)

Last close As at 14/10/2025

GBP5.81

−6.00 (−1.02%)

Market capitalisation

GBP555m

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Research: TMT

discoverIE Group — Organic revenue and order growth resumes

After a long period of destocking by customers, discoverIE has reported a return to organic revenue growth, with Q226 organic revenue up 1% y-o-y and H126 up 0.5% y-o-y after previously reporting flat organic revenue in Q126. Organic order growth was strong in Q226, up 8% y-o-y, providing a book-to-bill above one and a strong order book for delivery in H226. With trading in line with board expectations, we maintain our earnings forecasts.

Katherine Thompson

Written by

Katherine Thompson

Director

Electrical components

H126 trading update

15 October 2025

Price 581.00p
Market cap £555m

Net cash/(debt) at end FY25

£(94.3)m

Shares in issue

95.5m
Free float 96.0%
Code DSCV
Primary exchange LSE
Secondary exchange N/A
Price Performance
% 1m 3m 12m
Abs (3.3) (18.1) (1.4)
52-week high/low 754.0p 466.4p

Business description

discoverIE is a leading international designer and manufacturer of customised electronics to industry, supplying customer-specific electronic products and solutions to OEMs.

Next events

H126 results

2 December

Analyst

Katherine Thompson
+44 (0)20 3077 5700

discoverIE Group is a research client of Edison Investment Research Limited

Note: PBT and diluted EPS as per discoverIE’s adjusted metrics (excludes amortisation of acquired intangibles and exceptional items).

Year end Revenue (£m) PBT (£m) EPS (p) DPS (p) P/E (x) Yield (%)
3/24 437.0 48.2 36.78 12.00 15.8 2.1
3/25 422.9 50.1 38.68 12.50 15.0 2.2
3/26e 447.3 52.6 39.44 13.00 14.7 2.2
3/27e 461.4 55.0 41.03 13.55 14.2 2.3

Organic growth turns positive in Q226

The improving revenue trend continued in Q226, with discoverIE reporting organic revenue growth of 1% y-o-y, and in H126 0.5% y-o-y after previously reporting flat organic revenue in Q126 and declines in every quarter of FY25 (Q125 -12%, Q225 -7%, Q325 -3%, Q425 -4%). H126 group revenue grew 2% y-o-y (3% at constant exchange rates (CER) including 2.5% from acquisitions) and the company traded in line with the board’s expectations for adjusted earnings. As in Q126, three of the four operating units (Sensing, Connectivity and Magnetics) generated organic revenue growth whereas the Controls unit continued to see subdued demand from certain large customers. Gross margins have remained robust and working capital tightly managed. Gearing at the end of H126 is expected to be 1.3x, below the target range of 1.5–2.0x, providing c £80m in funding capacity to support the company’s growing acquisition pipeline.

Positive outlook; reflecting mix in forecasts

Group orders were 5% higher CER, with 0.5% organic growth and orders in line with revenue. In Q226, orders grew 13% CER, with 8% organic growth. This compares to a 4% CER decline in Q126, affected by a large order received in Q125. Reflecting the lower proportion of higher margin Controls business in the mix, we have trimmed our adjusted operating profit forecasts for FY26 and FY27. This is offset by lower net interest costs due to better cash generation, resulting in unchanged earnings forecasts for both years.

Valuation: Discount has widened

The stock is trading on P/E multiples of 14.7x in FY26e and 14.2x in FY27e. This continues to be at a discount to the wider UK industrial technology peer group (47% in FY26e and 33% in FY27e) and at a larger discount to peers with a similar decentralised operating model (discount to the average of Diploma and Halma of 54% in FY26e and 53% in FY27e). With the resumption of organic revenue and order growth, the company is well positioned to benefit as market conditions improve and in particular as demand returns in the Controls business.

Changes to forecasts

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