Considerable untapped potential

Victorian Plumbing’s FY25 results illustrate the strength of its market-leading, profitable and cash-flow generative business. In this initiation report we review the group’s attractive investment thesis and conclude the 40% sell-off in the past 12 months significantly undervalues the group’s potential. We initiate coverage with a 110p Fair Value equating to 1.1x EV / Revenues, c.11x EV/EBITDA and a c.5% FCF yield (cal 2026).

Victorian Plumbing has navigated major changes, completing a £21m warehouse, acquiring Victoria Plum for £22.5m, and launching into homewares. FY25 revenues rose 5% to £310m with market share up to 21.5%, while adjusted PBT grew 5% to £24.3m despite cost pressures. The MFI relaunch shows promise with strong reviews and controlled start-up costs, supported by disciplined investment and robust cash flows.

We value the bathrooms business on 9x cal 2026 EV/EBITDA (implying over £330m EV, c.1x Revenues, nearly 100p per share) with the potential for the homewares business to be worth c.£45m (3x cal 2028 EV / Revenues), adding another c.15p per share. Hence, we see scope for a significant re-rating as confidence builds in management’s strategy.