Built-in installations enhance growth outlook

Marks Electrical's preliminary FY2023 results confirmed the 21.5% sales growth and £7.5m EBITDA announced in the April trading update. The company generated £7.1m of free cash flow in FY2023, compared with £5.7m a year earlier, to end the year with a £10.0m positive net cash balance. Moreover, sales gains were 30% in the first two months of the current financial year.

An upgraded built-in installations programme represents an important addition to MRK's service offering, and raised awareness levels were notable in London, where they increased from 12% to 22% between October 2022 and May 2023 - a reinforced presence in the nation’s capital should be seen as a clear route to growth.

MRK’s ability to combine a consistent growth strategy with constant improvements in its offering and expanding awareness should, in our view, be rewarded with a higher share price. We maintain our 150p fair value, which implies FY2024 EV/sales of 1.3x and 16.2x FY2024 EV/EBITDA based on our current forecasts.