Diploma Plc: Structural demand trends support growth

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Diploma Plc: Structural demand trends support growth

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Diploma Plc

Structural demand trends support growth

Reiterate Rating: BUY | PO: 7,600 GBp | Price: 6,835 GBp

Another quarter another guidance upgrade 20 May 2026

Diploma reported a strong set of 1H26 results, with c15% organic growth and 24.5% Equity

margins in the period and the third guidance upgrade this year (organic growth outlook

now at 12% vs 9% previously, inorganic growth now expected at 6% vs 3% previously).

Key ChangesWe raise our revenue, adj EBITA and adj EPS ests by c5-7% FY26-28E mainly as we

raise our Controls organic numbers and factor in recently announced acquisitions. PO (GBp) Previous Current

goes up to GBp7,600 from GBp6,800. We reiterate Buy on attractive growth outlook, Price Obj. 6,800.00 7,600.00

margin profile & additional M&A optionality. Diploma is part of our SMID Best Ideas List. 2026E EPS 222.36 237.04

2027E EPS 238.35 249.92

2028E EPS 254.69 267.11Controls firing from all cylinders

Controls continues to benefit from its strong portfolio mix (+26% organic growth in

1H26), with IS Group, Clarendon & WCW all growing DD and Peerless continuing with its Virginia Montorsi >>

Research Analyst

best-in-class performance this year (mgmt. noted >50% margins during the earnings MLI (UK)

call). We raise our org. growth ests for Controls for FY26 to 20%, implying c15% growth 44 20 7996 2921 virginia.montorsi@bofa.com

in 2H25, and c33.5% margins in FY26E normalising to c30% by FY28.

Longer term opportunities in Defence

While we understand the market’s focus on Controls’ Civil Aerospace end-market (which Stock Data

continues to be resilient both on the OE & aftermarket), we think DPLM’s progressively Price 6,835 GBp