IMCD Organic growth, Acquisitions and Operational leverage
In this note we go over the most important drivers of our business case. We provide a breakdown of our organic growth assumptions and shift some of the recovery from FY25 to FY26. We reduce acquisitional growth due to lower spillover from 2024 acquisitions and provide a detailed overview of expected acquisition dynamics. Our long term Gross profit margin forecasts increase, due to structural improvements. We expect significant operational leverage given the elevated OpEx levels, due to acquisitions. Our DCF based valuation results in a fair valuation of € 154 per share, an increase compared to our previous Target Price of € 140. Given the upside we increase our recommendation from Hold to Accumulate supported by the return to organic growth, structural gross profit margin improvements and expected operational leverage.IMCD Group is a specialty chemicals group based in the Netherlands. Co. is engaged in the sale, marketing and distribution of specialty chemicals and food ingredients globally. Co.'s business groups are Detergents, Pharma, Personal Care, Coatings, Food & Nutrition, Lubricants, Synthesis, Plastics and others. Co.'s product offering includes additives, antioxidants, extracts, preservatives, acids, lubricants, oils, softeners, wax, components for oral, topical and vaccine drug formulations, fragrances, pigments, solvents, resins, flavors, herbs and spices, surface active agents, and fillers, among others. Co. maintains offices and warehouses in Europe, Asia Pacific, Africa, the USA and Brazil.
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