A latest research note from Equity Development presents a positive view of Norcros plc (LON:NXR), with the broker retaining a fair value estimate of 400p per share. At the time of the note, this was 47% above the company’s share price of 272p, suggesting Equity Development sees meaningful value in the business as it continues to reshape around a more focused European bathroom products strategy.
Norcros designs and supplies branded mid and premium bathroom products across the UK, Ireland, Scandinavia, South Africa and selected export markets. Its portfolio includes category-leading brands, broad product coverage and a diversified business-to-business customer base.
The latest research note, written by Research Analyst Toby Thorrington, highlights how Norcros has continued to make strategic progress despite a difficult market environment. As Thorrington writes: “Against a generally unhelpful trading backdrop over the last two years or so, Norcros has invested in strengthening its core UK/Ireland operations, acquired a business in Mainland Europe and exited capital-intensive non-core businesses.”
That is an important point to take note of. Norcros is not being presented as a business relying purely on a recovery in market conditions. Instead, the company has been taking practical steps to improve its structure, sharpen its focus and support future growth.
FY26 Results Highlights
Equity Development’s note sets out several key financial and operational highlights from Norcros’ FY26 results:
- Group revenue increased to £393.4m, compared with £368.1m in FY25.
- Company normalised pre-tax profit rose to £40.9m, up from £36.5m.
- Company normalised fully diluted EPS increased to 35.9p, compared with 32.4p.
- The full year dividend increased by 8.7% to 11.3p per share.
- The proposed final dividend rose by 10.1% to 7.6p per share.
- Europe accounted for around three quarters of group revenue and more than 90% of group EBIT.
- UK and Ireland like-for-like revenue increased by 0.7%.
- UK and Ireland EBIT margin improved by 40 basis points to 15.9%.
- Year-end pre-IFRS16 net debt was £66m, equal to 1.2x gearing.
- Cash conversion was strong at 116%, ahead of the company’s 90% target.
These results show a company making progress in a challenging sector backdrop. Building products markets have faced softer volumes, particularly in areas linked to housing and consumer spending, but Equity Development believes Norcros’ UK and Ireland operations have outperformed their subsector peer groups over the last two to three years and gained market share.
A More Focused European Business
A central theme of the note is Norcros’ move towards becoming a more Europe-centric bathroom products group. The acquisition of FIBO in October 2025 marked the company’s first business based in Mainland Europe and broadened its position in waterproof wall panels.
FIBO contributed £32.7m of revenue and £3.3m of EBIT in FY26, representing a margin of 10.2%. On a full year basis, the equivalent metrics were £68.2m of revenue, £7.7m of EBIT and an 11.3% margin.
The acquisition complements Grant Westfield, which Norcros acquired in FY23, and gives the group a foothold from which it could build a wider Mainland European platform over time. Equity Development expects any future expansion to be measured and disciplined, rather than based on one large transformational deal.
The proposed disposal of South African operations is also important. If completed, it would leave Norcros more focused on Europe, with the UK and Ireland remaining dominant in the near term. The note says the intended disposal could also help bring the group’s stronger European margin profile more clearly into view.
Cash Generation Remains a Strength
Norcros’ cash generation is another key feature of the Equity Development note. The company delivered 116% cash conversion in FY26, ahead of its own 90% target. The broker notes that Norcros has beaten that 90% level in eight of the last ten years, using an average for the COVID-affected FY21 and FY22 years.
Although net debt increased during FY26 because of the FIBO acquisition, underlying cash generation remained strong. Equity Development forecasts pre-IFRS16 net debt reducing to £55.5m in FY27E, £39.8m in FY28E and £22.5m in FY29E, before allowing for any acquisitions or proceeds from a potential South African disposal.
This supports the view that Norcros has room to keep investing in its brands, products and geographic reach while maintaining financial discipline.
Valuation View
Equity Development has retained its 400p per share fair value estimate for Norcros. The broker notes that the company’s valuation appears modest, with a FY27E price earnings ratio of 6.8x, falling to 6.2x by FY29E. The forecast dividend yield is 4.3% for FY27E, rising to 4.5% by FY29E.
The note also says that applying the average price earnings ratio of UK-listed peers would generate an equivalent share price of 403p, which is close to Equity Development’s DCF-derived fair value estimate.
Final Thoughts
Norcros plc is being presented by Equity Development as a business making steady strategic progress while maintaining strong cash generation and disciplined capital allocation. The company’s move towards a more focused European platform, supported by the FIBO acquisition and the proposed South African disposal, gives the group a clearer strategic direction. While trading conditions remain mixed, the FY26 results show resilience in the core UK and Ireland operations, improving margins and a higher dividend. Equity Development’s retained 400p fair value estimate reflects its view that Norcros’ current share price does not fully capture the company’s progress, balance sheet strength and medium-term growth potential.
