Powering even further ahead

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IMI

Powering even further ahead

Reiterate Rating: BUY | PO: 3,400 GBp | Price: 2,936 GBp

Power, Nuclear and LNG drive order growth

03 August 2026

1H26 results beat expectations by 2% on revenues, with organic growth 90bps ahead

and operating leverage driving operating profits 4% above consensus. Despite the

strong 1H, we expect FY26 numbers in line with guidance (MSD organic growth and

slight YoY margin expansion, implying a >20% margin), modelling 5.1% organic growth

(cons 5%) and margins of 20.3% (cons 20.2%), with 2H facing a tougher growth comp

and some profitability drag from cyber-security investments. More importantly, 2Q

confirmed a strong medium-term growth outlook for Process Automation, with OE

Power orders up 100% organically (largely to gas turbine OEMs), a major nuclear OE

order, robust nuclear AM (orders +33% YoY) and LNG OE orders up 67% YoY. This

reinforces our thesis that consensus underestimates IMI's automation growth (read:

Powering ahead). Our 2027/28 automation organic growth estimates of 6.2%/6.5% sit

120/180bps ahead of consensus. We raise group adj. EBITA by c.2% in FY26-28 on

strong delivery and an improving growth outlook, leaving us 4-5% ahead of consensus in

FY27/28. PO moves from 3,300p to 3,400p and we reiterate Buy.

Equity

DC exposure increasingly supports Life Tech growth

Benjamin Heelan >>

Research Analyst

Merrill Lynch (DIFC)

Within Life Technology, IMI supplies precision fluid-control content and miniature valves,

into DC liquid cooling systems. While management had guided to c.GBP30m of orders in

FY26, 1H already delivered GBP18m (+200% YoY); we therefore expect IMI to book

c.GBP40m of orders in 2026, which typically convert to revenue within weeks, equivalent

to c.5% of Life Technology revenues. Strong end-market growth alongside share gains

underpins our subsegment growth expectation of 30%/25%, supporting Life Technology

organic growth estimates of 6%/5% in FY27/28, 140/100bps ahead of consensus.

Rerating potential and more buybacks through 2028E

At c.14x EV/EBITA FY2, IMI trades at a slight premium to its history, but shows improved

profitability and cash generation.…