Titon Holdings (LON: TON) has released its FY25A results, and according to the latest research note from Shore Capital, the company continues to demonstrate strong medium-term potential despite a challenging construction environment. Analyst Tom Fraine, CFA, who authored the report, remains cautiously optimistic, citing the group’s profitability improvements, product success, and strong balance sheet as key drivers of future value.
The headline figures from FY25A paint a story of resilience. Group revenue edged up 2.1% to £15.8 million, with UK mechanical ventilation systems delivering a standout 26.8% growth. This solid performance helped offset the broader sector challenges in residential new builds. Shore Capital’s Tom Fraine noted the significance of this trend, stating that “a good product and customer service have been key drivers of Titon’s success in this fast-growing market, in which it is gaining share against well respected peers.”
While the window and door hardware segment declined by 13.3% to £7.2 million due to weaker demand and sales execution issues, the research highlights a return to growth in FY26F. Strategic actions, including sales team reorganisation and the appointment of a new Sales Director, are expected to support this rebound.
Highlights from Titon’s FY25A Results:
- Group revenue: £15.8m, up 2.1%
- UK mechanical ventilation systems revenue: +26.8%
- Window and door hardware revenue: -13.3%
- Gross margin: 32.9% (up from 28.0% in FY24A)
- Underlying EBITDA: £811k (FY24A: £5k)
- Net cash: £3.5m with no debt
- Property valuation: £5.8m vs £1.6m book value
- Market capitalisation: £11.0m
Fraine highlights the remarkable improvement in profitability, underpinned by operational efficiencies and cost control. “The gross margin increased considerably to 32.9%… alongside early efficiency improvements drove an increase in underlying EBITDA to £811k (FY24A: £5k). This offset labour cost increases.”
The company’s strong cash position further strengthens its investment case. With £3.5m in cash and no debt, and property assets significantly undervalued on the balance sheet, Shore Capital sees substantial upside potential. Fraine explains, “this compares to the accounting carrying value on the Group’s balance sheet of £1.6m and indicates considerable upside potential for the company’s £10.9m market capitalisation.”
Looking ahead to FY26F, Shore Capital forecasts 6.3% group revenue growth, including an 11.5% increase in mechanical ventilation systems and a 3% rise in hardware sales. EBITDA is forecast to reach £1.0m. Despite near-term bottlenecks related to Gateway 2 construction approvals, management remains upbeat about continued share gains and improving margins.
On the valuation front, Shore Capital sees room for meaningful re-rating. Based on Titon’s medium-term goals of 10% organic revenue growth and a 15% operating margin, Fraine estimates revenue could exceed £23m and adjusted operating profit hit approximately £3.5m. This scenario could push the enterprise value to around £28m, compared to today’s £7.5m.
On a Final Note
Titon Holdings’ latest results reflect a business rebuilding itself with strategic clarity and operational focus. The sharp rise in margins, strong momentum in its core product areas, and a robust balance sheet highlight why Shore Capital remains supportive. With the groundwork laid for recovery and growth, the shares may offer considerable value over the medium term.
