Overview
Equiniti Group Plc (EQN) is a provider offinancial services using its Technological platforms to a varying range of organisations spread diverse sectors across the world. The company’s serving segments are Intelligent Solutions, Investment solutions, Pension Solutions and Interest. The company serves BFSI, Tech, Media & Telecommunication, Health, Public Services and Retail industries through its services.

Financial Highlights – H1 Financial Year 2019 (£, million)

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2019, the company’s revenue surged by 8.3 per cent to £275.1 million as against £254.0 million in H1 FY2018 proforma. The increase in revenue was driven by strong revenue growth from Investment Solutions and Intelligent Solutions businesses for the period. The underlying EBITDA showed a growth of 3.9 per cent at £60.9 million in H1 FY2019 from £58.6 million in H1 FY2018 proforma. The underlying EBITDA margin declined to 22.1 per cent in H1 FY2019 versus 23.1 per cent in H1 FY2018 proforma. The company’s EBIT was up by 79.5 per cent to £20.1 million in H1 FY2019 from £11.2 million in H1 FY2018 proforma. The company’s PBT (Profit before tax) surged significantly by 222.2 per cent to £11.6 million in H1 FY2019 from £3.6 million in H1 FY2018 proforma. The company’s PAT (Profit before tax) surged significantly by 257.7 per cent to £9.3 million in H1 FY2019 from £2.6 million in H1 FY2018 proforma. The company’s diluted earnings per share were up by 1,050 per cent to 2.3 pence in H1 FY2019 from 0.2 pence in H1 FY2018. The company’s underlying earnings per share were up by 1.3 per cent to 7.7 pence in H1 FY2019 from 7.6 pence in H1 FY2018. In line with decent performance, the board has declared an interim dividend of GBX 1.95 per share in line with the company’s progressive dividend policy. The company’s net debt was up by 4.1 per cent to £370.2 million in H1 FY2019 from £352.9 million in H1 FY2018 proforma.

Share Price Performance

Daily Chart as at 11^th September 19, before the market close (Source: Thomson Reuters)
On 11^th September 2019, Equiniti Group Plc shares were trading at GBX 209.80 at the time of writing before the market close (at 3:35 PM GMT), up by 0.57 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 267.00/GBX 167.05. The group’s stock is reflecting significantly lower volatility as against the benchmark index based on the company’s beta of 0.10.

Valuation Methodology


Conclusion
Although the environment in which the company operates is full of uncertainties. The company is actively looking forward to recruiting more professionals to increase the headcount but would be impacted by ongoing Brexit as it will put restrictions on the entry of individuals from the European Union.

The company had shown good financial performance for the first half of the financial year 2019. Both the top-line and the bottom-line performance has improved for the period. The company’s profitability has improved significantly.

The company is expecting an organic growth in the UK due to exceptional client base. The company is looking to explore a market opportunity in the US by selling digitised services to the blue-chip client base. The company is also looking forward to growing through acquisitions, which will help in enhancing capabilities.

Based on the decent prospects and supported by valuation done using the above method, we have given a "Speculative BUY" recommendation at the closing price of GBX 208.60 (as on 10th September 2019) based on 19x NTM Price/Earnings multiple (approx.) on FY19E earnings per share (approx.).

*All forecasted figures have been taken from Thomson Reuters.
*The “Speculative Buy” recommendation is also valid for the current price as covered in the report (as on 11^th September 2019).

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