European Ingredients: Taking stock after the sector rally

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European Ingredients: Taking stock after the sector rally

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01 Jul 2026 00:00:00 ET │ 36 pages

European Ingredients

Taking stock after the sector rally

CITI'S TAKE

Ranulf Orr, CFA AC

The ingredients sector has rebounded sharply (+c.17% over the past three +44-20-7986-3922

months), but we believe the recovery still has further to run. Despite the ranulf.orr@citi.com

recent re-rating, the group’s NTM EV/EBITDA remains c.25% below its 10-

year average, with investor positioning continuing to reflect uncertainty in Sebastian Satz, CFA AC

the outlook. In our view, the market is still underestimating the resilience of +44-203-569-3662

the industry. The recent rally has been driven by easing demand concerns, sebastian.satz@citi.com

improved company commentary, and de-escalation in the Middle East.

However, we see further upside as growth accelerates into 2H26, supported Omi Pallavi

by the annualisation of prior headwinds, contract ramp-ups, and pricing +44-20-7508-1367

actions. This disconnect between improving fundamentals and cautious omi.pallavi@citi.com

positioning is most evident in Symrise. We see a compelling set-up into 2Q

results and therefore open a positive catalyst watch. We remain

constructive across the space, with a preference for Novonesis, Symrise,

and DSM-Firmenich.

Valuations low, despite sector rally — Following a two-year de-rating, the

ingredients sector has rebounded on improving demand signals and easing macro

concerns. However, even after the recent rally, valuations remain undemanding,

with NTM EV/EBITDA still c.20% below long-run averages, leaving scope for further

recovery as fundamentals normalise and growth accelerates into 2H26.

Preferred stocks unchanged — We favour Novonesis for its structural growth and