Last close As at 01/10/2026
GBP1.50
▲ 3.00 (2.04%)
Market capitalisation
GBP78m
Research: Industrials
Fevara’s FY26 trading update indicates continued progress against its strategy, with adjusted EBIT expected to increase c 60% y-o-y to c £6.0m, ahead of company-compiled consensus of £5.5m. Revenue from continuing operations is expected to reach c £86m, with 8% l-f-l growth. The UK, European and US businesses performed well, while Brazil traded in line with expectations. Year-end net debt of c £2.0m was better than anticipated, supported by strong trading cash conversion and disposals. With strategic refocusing complete, the emphasis moves to further margin improvement and Brazilian expansion. We have raised our FY26e and FY27e revenue and profit forecasts and increase our valuation marginally to 190p per share.
| Year end | Revenue (£m) | PBT (£m) | EPS (p) | DPS (p) | P/E (x) | Yield (%) |
|---|---|---|---|---|---|---|
| 8/24 | 75.7 | 2.5 | 2.60 | 5.20 | 56.5 | 3.5 |
| 8/25 | 78.8 | 4.2 | 4.40 | 2.40 | 33.4 | 1.6 |
| 8/26e | 86.0 | 5.8 | 9.40 | 2.50 | 15.6 | 1.7 |
| 8/27e | 94.1 | 6.8 | 10.90 | 2.80 | 13.5 | 1.9 |
The principal positive is the improvement in profitability. Expected adjusted EBIT is c 9% above consensus, while revenue is broadly in line with the £86.3m consensus figure, both compiled by the company as at 29 September. The implied adjusted EBIT margin increases by c 230bp y-o-y to c 7.0%, demonstrating progress towards management’s 10% medium-term target. LMB sales continued to grow, although the update does not quantify the individual contributions to margin improvement. Early FY27 trading is encouraging and in line with expectations ahead of the peak Northern Hemisphere season. Performance through this period will be important in assessing the sustainability of the improved profitability.
Closing net debt of c £2.0m was better than anticipated, reflecting strong trading cash conversion alongside property disposals and the sale of Chirton Engineering. The latter completed in August for £0.65m, with a further £0.2m deferred over two years, concluding the strategic review and establishing Fevara as a pure-play livestock supplements business. The £20m committed HSBC revolving-credit facility runs to November 2028, with two further one-year extension options and an additional £10m uncommitted facility. This supported FY26 acquisitions and provides capacity for further acquisitions and organic investment.
Following the forecast revisions, our valuation increases from 189p (previously) to 191p per share, an uplift of 0.8%. Sustained margin improvement and successful delivery of the Brazilian expansion remain important to the medium-term growth opportunity. Product launch in Brazil is scheduled from Q427, with installation of LMB capacity is progressing well. Management remains confident in its medium-term targets of £120m revenue, £15m adjusted EBITDA, a 10% adjusted EBIT margin and 20% ROCE. FY26’s profit progression supports this, although further margin improvement and successful execution of the expansion plans remain.
Fevara offers a combination of improving profitability in established markets and a new growth opportunity in Brazil. Following the completion of its strategic refocusing, the group is a specialist livestock supplements business, with low-moisture blocks (LMB) central to its strategy. The investment case rests on improving margins in the UK, Europe and US, increasing sales of differentiated, higher-margin products and building a Brazilian business through the acquired operating, distribution and manufacturing platform.
The FY26 trading update provides further evidence of delivery. Expected adjusted EBIT of c £6.0m implies a margin of c 7.0%, compared with c 4.7% in FY25, supported by 8% l-f-l revenue growth. We believe these changes provide a firmer basis for sustaining margins, with further sales growth offering scope for operating leverage. Encouraging early FY27 trading supports this view, although seasonal demand and input costs remain important variables.
Brazil provides an additional source of medium-term growth. The acquisitions of Macal and the São Paulo State production facility establish an operating, distribution and manufacturing platform in a large cattle market. LMB production capacity is being installed, with product launch scheduled from Q427, placing the more substantial opportunity beyond our immediate forecast years. Year-end net debt of c £2.0m and the £20m committed banking facility provide flexibility to support this expansion.
Management’s medium-term targets are £120m revenue, £15m adjusted EBITDA, a 10% adjusted EBIT margin and 20% return on capital employed (ROCE). Achieving these requires both further improvement in the established businesses and a growing Brazilian contribution, while maintaining capital discipline. Sustaining the improved profitability and converting Brazil’s potential into earnings and cash flow remain central to the investment case.
We increase our FY26e revenue forecast by 0.7% to £86.0m and EBIT by 7.3% to £5.9m, reflecting the stronger profitability indicated by the trading update. For FY27e, we raise revenue by 0.6% to £94.1m and EBIT by 9.4% to £7.0m. The larger revisions to profit than revenue reflect our expectation that improved FY26e profitability provides a firmer base for further margin progress. We see scope to sustain these gains as the benefits of business simplification carry through, while further sales growth should provide operating leverage across the existing cost base. Continued LMB sales growth and encouraging early FY27 trading support this view, although performance through the peak Northern Hemisphere season will be an important test. Our revised forecasts imply an EBIT margin of 7.4% in FY27e, up from 6.9% in FY26e.
Following the forecast revisions, our valuation increases from 189p (previously) to 190p per share, an uplift of 0.8%. The change is modest despite the larger percentage increases in near-term normalised EBIT. Sustained margin improvement and successful delivery of the Brazilian expansion remain important to the longer-term investment case.
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London │ New York │ Frankfurt
20 Red Lion Street
London, WC1R 4PS
United Kingdom
Research: Industrials
Smiths News has issued a positive FY26 trading update stating that it expects to deliver FY26 results ahead of market expectations, driven by stronger-than-expected demand for collectables in H2, and that FY27 trading has started positively. We nudge our FY26 adjusted operating profit estimate up by 3%. The company confirmed that its transformational programme to establish a national distribution footprint has begun, with further guidance on the financial effects due with the FY26 results on 4 November against a context of a return on capital above the company’s hurdle rate. Our 96p DCF valuation implies over 40% upside.