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Currency in GBP
Last close As at 07/06/2023
GBP0.61
▲ −1.50 (−2.39%)
Market capitalisation
GBP190m
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.
Director, Financials & Industrials
Adam Semple
CFO
Alan Dunsmore
CEO
Forecast net debt (£m)
13.8
Forecast gearing ratio (%)
6
| % | 1M | 3M | 12M |
|---|---|---|---|
| Actual | (5.7) | 0.5 | (5.6) |
| Relative | (3.9) | 4.4 | (4.8) |
| 52 week high/low | 66.0p/48.0p |
The quality of Severfield’s revenues is materially underappreciated by the market in our view, especially now that the UK and EU are embarking on huge investment programmes to renew and upgrade infrastructure to address global trends, such as the drive for net zero emissions. The reorganisation of the group, the internal improvement project (Project Horizon) and the EPS-enhancing M&A deal are not fully reflected in the FY24e P/E rating of c 7.0x, which is comfortably below the long-term average of 10.0x. Our positive stance is supported by the company’s strong balance sheet, progressive dividend and yield of over 5%.
| Y/E Mar | Revenue (£m) | EBITDA (£m) | PBT (£m) | EPS (p) | P/E (x) | P/CF (x) |
|---|---|---|---|---|---|---|
| 2021A | 363.3 | 29.6 | 24.3 | 6.68 | 9.2 | 5.5 |
| 2022A | 403.6 | 33.4 | 27.1 | 7.03 | 8.7 | 4.7 |
| 2023E | 490.3 | 38.5 | 31.1 | 8.30 | 7.4 | 4.2 |
| 2024E | 565.0 | 45.0 | 35.2 | 8.95 | 6.8 | 3.7 |
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