Norcros plc (LON:NXR) was discussed by Gervais Williams, Co-Fund Manager of Diverse Income Trust plc (LON:DIVI) in an exclusive interview with DirectorsTalk.
DirectorsTalk asked:
Norcros plc is the largest designer and supplier of branded bathroom products in the UK and Ireland and second position in South Africa. They delivered a strong set of results in H1 and continue to grow market share and management is exceptionally focused on a number of significant growth drivers. Interestingly, Deutsche Bank set a target price of 375 pence on the 11th of December, and they’re trading at 242 pence today. Is this another business on a very solid footing?
Gervais Williams commented:
Again, the stock has actually performed pretty well, actually so the share price has always risen. You might think that bathroom products aren’t that exciting, shower cubicles, but they’ve done very, very well to not just maintain that market position but improve it over recent years. Small acquisitions have actually allowed them to generate not just more cash but a stronger market position.
So even now, even a company like this, where over the recent years, UK quoted companies have been depressed, valuations have been held back, a company which is already successful is standing on, according to Bloomberg, a PE ratio of 7.8 times to March 2025, with a 4.25% yield.
Again, these kinds of companies, they’re just really well positioned, not just to survive but thrive. Tough market conditions will mean some of the competition goes down, opportunities to invest where many companies can’t keep up with them are there. We think actually, again, it’s an unloved success story which can continue to succeed from here, and the share price could go considerably better.
As I said, it’s already outperformed, but its valuation is still overlooked, that’s the nature of the UK market. We think there’s so much more to be had from here for Norcros.
Diverse Income Trust plc invests primarily in quoted or traded UK companies with a wide range of market capitalisations, but a long-term bias toward small and medium sized companies.
