Market share gains drive revenue growth

Significant market share gains in a particularly tough market environment were responsible for Marks Electrical recording a strong 13.7% sales revenue growth rate in the first four months of its FY2023 financial year. With a sustained and impressive 4.8 Trustpilot score, and flat inventory levels, the company appears well positioned to make further sales gains and convert revenue and profits into increased free cash flow. 

The current market share position implies massive headroom for growth, driven by a superior premium branded product range and service offering. Financially, a focus on costs and working capital should ensure that the company has adequate resources to fund future sales revenue expansion. Valuation does not reflect the clarity of Marks Electrical’s growth outlook, in our view. We continue to argue that the company’s well defined growth strategy - and ability to implement it - is superior to its peer group, much of which is not profitable. We reiterate our 150p / share fair value.