Highlights

  • Panmure Liberum has issued a buy rating on ZIGUP with a target price of GBX 600.
  • The rating follows the release of ZIGUP’s half-year results for the period ended 31 October 2025.
  • The update outlines revenue growth, higher operating earnings, and continued progress across fleet, contracts, and operating models.

ZIGUP (LSE:ZIG), an integrated mobility solutions platform operating across the full vehicle lifecycle, has received a buy rating from Panmure Liberum, with the analyst assigning a target price of GBX 600. The rating might follow the company’s half-year financial results, which detail performance trends, operational developments, and expectations for the remainder of the financial year.

Half-year financial performance

For the six months ended 31 October 2025, ZIGUP reported underlying revenue growth of 4.5%, supported by a 10.5% increase in vehicle hire revenue. Total revenue rose 2.9%, reflecting a normalisation in vehicle defleet volumes. Vehicle hire performance was led by Spain, where revenue increased 16.3%, while the UK and Ireland delivered growth of 6.5% through product mix, vehicle mix, and pricing actions.

EBIT before disposal profits increased 11.5% compared with the prior corresponding period, driven by operating business performance. Disposal profits moved lower as expected, reflecting reduced volumes of 15,800 vehicles and lower UK and Ireland profit per unit, while residual values remained stable.

Rental margins and services performance

Rental margins remained elevated across both Spain and the UK and Ireland, supported by utilisation levels and ongoing operational efficiency initiatives. The UK and Ireland margin benefited from revenue phasing linked to a single contract in the first half, with full-year margins expected to align with the company’s stated 15% to 16% range.

Claims and Services revenue and margins were broadly unchanged, reflecting lower claims volumes and stable internal repair activity. The cost base associated with the New Law environment continued to be addressed, with margins in the second half expected to move closer to the medium-term level of 5%.

Capital investment and fleet expansion

ZIGUP recorded a net capital expenditure outflow of GBP 245.9 million during the period, comprising replacement capex of GBP 172.3 million and growth capex of GBP 73.6 million. The company noted that it is approaching an inflection point, with steady-state cash flow expected to improve as the fleet replacement programme advances.

Group fleet size exceeded 135,000 vehicles, up from 132,500 at the end of the prior financial year. Normalised supply conditions supported fleet growth in Spain, while replacement activity continued in the UK and Ireland.

Operational developments and transformation

During the first half, ZIGUP secured new rental and fleet management contracts, including a major rail maintenance fleet agreement in Spain and a large fleet management mandate in the UK and Ireland. Insurance-related contract wins and renewals were also recorded, alongside the introduction of additional services.

The company commenced a new phase of transformation focused on simplifying the UK and Ireland operating model. The programme is designed to separate Rental and Repair into two operating businesses and is expected to be completed within 18 months. Benefits are anticipated to emerge progressively from FY2027, with incremental annualised savings of approximately GBP 20 million targeted by FY2028.

Outlook

ZIGUP stated that trading conditions in the remainder of the year support expectations that underlying profit before tax will be at least at the upper end of analyst forecasts. Spanish rental performance, ongoing fleet investment, and stable UK and Ireland rental demand underpin this view. Claims and Services volumes are expected to increase in the second half as new contracts contribute, with margins moving closer to medium-term targets.