Highlights

  • Investec and Rothschild & Co Redburn issued Buy ratings on Diploma plc with target prices of GBX 6,000 and GBX 6,200.
  • Diploma reported FY25 organic revenue growth of 11% and earnings per share growth of 21%.
  • FY26 guidance points to organic revenue growth of 6% and operating margins of around 22.5%.

Diploma plc (LSE:DPLM) has received Buy ratings from two major brokers, with Investec Bank (UK) Plc assigning a target price of GBX 6,000 and Rothschild & Co Redburn setting a higher target of GBX 6,200. The ratings follow recent company updates and place Diploma among positively rated UK-listed industrial and life sciences distributors.

Revenue and Earnings Trends Reported

As per the preliminary results update for the period ended 30 September 2025, Diploma reported organic revenue growth of 11% for the period, exceeding prior expectations. Total reported revenue growth reached 12%, supported by net acquisition contributions of 3%, partially offset by foreign exchange movements.

Operating margins increased to 22.5%, representing an expansion of 160 basis points year-on-year. Earnings per share for FY25 rose by 21%, extending the company’s multi-year earnings growth trend. Returns also increased, with disciplined capital deployment reflected in a return metric of 20.9%.

Acquisition Activity and Balance Sheet Position

Since the start of the fourth quarter, Diploma has completed six acquisitions with a combined value of GBP 92 million, executed at an average multiple of approximately 8x. Including earlier transactions, a total of seven acquisitions have been completed since the beginning of FY25, spanning sectors such as aerospace, defence and in vitro diagnostics.

The company reported strong cash generation during the period, with modest leverage of 0.8x, supporting ongoing acquisition capacity. Management indicated that the acquisition pipeline remains active across multiple geographies and end markets.

Sector Performance Across the Portfolio

Across Diploma’s operating segments, Controls delivered organic growth of 20%, with contributions from both domestic and international operations. Seals recorded organic growth of 2%, with sequential improvement observed during the second half of the year. Life Sciences posted organic growth of 6%, supported by activity across medtech and diagnostic markets.

The portfolio spans multiple end markets, providing diversification across industrial, healthcare and infrastructure-related demand profiles.

FY26 Guidance and Dividend Update

For FY26, Diploma provided guidance for organic revenue growth of approximately 6%, with performance expected to be weighted toward the first half of the year. Operating margins are anticipated to remain around 22.5%. Acquisitions announced to date are expected to contribute an additional 2% to reported growth, subject to completion timing.

The board recommended a final dividend of 44.1 pence per share for FY25, taking the full-year dividend to 62.3 pence, representing a 5% increase year-on-year. Subject to shareholder approval at the AGM on 14 January 2026, the dividend is scheduled for payment on 30 January 2026.