Norcros Plc (LON:NXR) has started the new financial year with another encouraging update, according to the latest research note from Shore Capital. The building products group reported 3.1% organic revenue growth for the 13 weeks to 5 July 2026, underlining the strength of its brands, pricing power and market share gains even in a softer trading environment.
The broker’s message is straightforward: Norcros is continuing to perform well, and the underlying business remains well supported. Management has left its expectations for FY27F unchanged after a solid first quarter, suggesting that the group is on track despite market conditions that remain far from easy. Reported revenue growth was even stronger at 27.9%, helped by the contribution from Fibo, which was acquired in October 2025.
Shore Capital said that share gains continued across the company’s geographies, while price increases also helped to drive organic growth. That combination more than offset weakness in underlying market demand. For investors, that matters because it suggests Norcros is not simply relying on end-market recovery. Instead, it is taking share, protecting margins and benefiting from the strength of its product portfolio.
The latest update also reinforces a positive longer-term picture. In FY26A, Norcros delivered a 20.0% underlying return on capital employed, up 270 basis points year on year and exactly in line with its medium-term target. Excluding its South African businesses, which the company has said it is exploring options to sell, the group recorded a 15.2% underlying operating margin in FY26A, ahead of its 15% group target. Cash conversion reached 116% in FY26A, comfortably ahead of the medium-term ambition of more than 90%.
These are important markers of quality for a cyclical industrial group. They point to a business that is converting profit into cash efficiently, managing capital well and continuing to improve its operational profile. Shore Capital also noted that Norcros is ahead of its 2028 SBTi carbon reduction target for Scopes 1 and 2, which may further support its positioning in the mid-to-premium parts of its markets.
Highlights from the latest update
- Organic revenue growth of 3.1% for the 13 weeks to 5 July 2026.
- Reported revenue growth of 27.9%, supported by the Fibo acquisition.
- FY26A underlying ROCE of 20.0%, in line with the medium-term target.
- FY26A cash conversion of 116%, ahead of the group’s target of more than 90%.
- Ex-South Africa FY26A underlying operating margin of 15.2%, ahead of the 15% target.
Shareholders will also take some comfort from the fact that two common investor concerns may soon become historical issues. Shore Capital highlighted the planned sale of South African businesses and the fact that pension payments are due to cease in less than 12 months. Together, those developments could simplify the investment case and reduce pressure on future cash flow.
The valuation case also remains attractive in the broker’s view. With the shares trading at 317p, Shore Capital maintained its 630p target price, implying meaningful upside if Norcros continues to execute as expected. While the share price has risen 21% since the FY26A results release, the stock remains 5.4% down year to date, which suggests the market may still be underappreciating the company’s progress.
As Shore Capital put it, “The stock appears materially undervalued to us on all metrics and we see scope for a rerating, noting that two key pushbacks from investors are likely soon to be historical issues after the Company announced its intention to sell its South African businesses, and pension payments are set to cease in less than 12 months’ time.”
That view is backed up by the broker’s unchanged forecasts, which continue to point to steady growth through FY27F and FY28F. Revenue is forecast to rise from £393.4m in 2026A to £440.9m in 2027F and £451.9m in 2028F, while adjusted diluted earnings per share are expected to increase from 35.8p to 37.4p and then 42.2p. Free cash flow to equity is also projected to remain healthy, reinforcing the appeal of the dividend profile.
For investors looking at the industrials sector, Norcros stands out as a company with consistent trading momentum, disciplined execution and a clear route to further operational progress. The latest research note from Shore Capital suggests the fundamentals remain solid, and that the market may still be overlooking the quality of the underlying business.
Key Takeaways
1. Norcros has delivered another solid trading update, with 3.1% organic revenue growth and continued market share gains.
2. The company’s medium-term targets remain well supported by strong ROCE, cash conversion and margin performance.
3. Shore Capital sees valuation upside, arguing that South Africa and pension-related concerns may soon be less of a drag on sentiment.
