A strong year end update from Hercules this morning confirms another period of impressive organic revenue growth, well ahead of expectations. This prompts 11% upgrades to our revenue and adjusted EBITDA forecasts, sustaining recent momentum into the new financial year. Hercules is led by an entrepreneurial and ambitious management team with additional firepower - following last month’s £8m fundraise - to take advantage of opportunities as they arise.
Hercules expects to report another record year, with revenue, adjusted EBITDA and adjusted PBT for FY24 all well ahead of market expectations. Revenue is expected to be over £105m, an increase of 24% year on year. For us, this prompts 11% upgrades to revenue and adjusted EBITDA forecasts, and a 55% upgrade to adjusted PBT, albeit from a low base.
Each of Hercules’ core divisions has delivered organic revenue growth. The Group’s markets (infrastructure and construction sectors) have been supportive but not without challenges. The performance has been underpinned by Hercules’ own growth initiatives (e.g. the launch of the Hercules Construction Academy) and an ability to respond to opportunities as they arise.
We share the confidence shown by recent supporters of the fundraise and see scope for further operational outperformance as FY25 progresses, with M&A being an obvious potential earnings and share price catalyst. We increase our Fair Value / share estimate from 60p to 70p.
