Luceco’s latest research note points to broad-based momentum
Luceco Plc (LON:LUCE) has delivered another encouraging update, with the latest research note from Zeus Capital highlighting a business that is growing across the board. The company reported first-half revenue of £143m, up 13% year on year, alongside adjusted operating profit of £15.8m, which rose 14%. For investors looking for a UK industrials name with exposure to electrification, energy efficiency and the wider net zero transition, the message from the note is clear: Luceco is continuing to build momentum while keeping its core business resilient.
The strongest driver was the Energy Transition division, where revenue surged 120% year on year. That category now includes EV charging and Demand Flexibility revenue, making it an increasingly important part of the group’s growth story. Just as importantly, the core business also performed well, with 6% growth despite a challenging economic backdrop. This gives a more balanced picture than a one-dimensional growth spike, because it shows Luceco is not relying solely on one theme to keep moving forward.
Highlights from the latest trading update
- H1 revenue increased 13% to £143m, with Q2 growth of 15% versus 11% in Q1.
- Adjusted operating profit rose 14% year on year to £15.8m.
- Energy Transition revenue increased 120% year on year and now includes EV charging and Demand Flexibility.
- The core business delivered 6% growth, demonstrating resilience in a softer economy.
- Bank net debt increased slightly to £69.6m, with net debt to EBITDA at 1.5x.
What is driving the improvement?
According to the note, the company’s growth is being supported by strong demand across product groups and sales channels. The Energy Transition offering is now doing more of the heavy lifting, but the established wiring accessories and lighting businesses remain solid contributors. That combination matters, because it suggests Luceco is expanding into newer areas without losing sight of the dependable cash-generative base that has long supported the group.
The balance sheet also remains manageable. Bank net debt rose modestly as the company invested in inventory ahead of the second half, but leverage remained comfortable at 1.5 times EBITDA. The note emphasises that this sits within the group’s preferred 1 to 2 times range, leaving room for sensible capital allocation. For shareholders, that should be reassuring, particularly in a market that tends to reward companies able to fund growth without stretching the balance sheet.
Outlook and updated valuation
The broker’s outlook is constructive. It expects demand across product groups and channels to continue, while noting that changes to the regulated mechanics of Demand Flexibility are beginning to crystallise. There is also a sensible expectation that recurring revenue per EV charger will moderate towards a more sustainable level in early second half trading. Even so, management is said to expect adjusted operating profit to come in ahead of market expectations in 2027.
On valuation, the note moves its central case to 254p per share, with a low case of 206p and an upside case of 266p. That central estimate sits above the current share price of 255p shown in the note, which underlines how much of the market has already recognised the company’s progress. Even so, the updated forecasts still point to further earnings growth, with sales projected to rise from £314.6m in 2026e to £346.5m in 2028e, while EBITDA is forecast to move from £49.6m to £56.9m over the same period.
For a general audience, the key attraction is straightforward. Luceco is benefiting from long-term structural themes, but it is also executing well in its traditional businesses. That makes the story more durable than a short-lived trend, and it helps explain why the latest research note is upbeat on the company’s medium-term prospects.
Three key takeaways:
1. Luceco delivered double-digit H1 growth, with Energy Transition products doing the heavy lifting and the core business still growing.
2. Balance sheet leverage remains within a comfortable range, supporting continued investment and capital flexibility.
3. The updated outlook and forecast upgrades suggest the company may still have room to surprise positively into 2027 and beyond.
