DIPLOMA (+) : Compounder credentials enhanced

研报英文原文证据摘录

DIPLOMA (+) : Compounder credentials enhanced

Refinitiv

Upgrading estimates

Recap: Diploma’s 1H26 results and FY26 guidance upgrade

Group organic growth accelerated to 15% from 14% in 2H25 and 8% in 1H25 with

operating margin expanding 300bps YoY to 24.5% and driving adj. operating profit

growth of +33% YoY. FD adj. EPS (3%/1% ahead of BNPPe/BBG consensus) grew 36%

YoY. Controls organic growth was 26% with organic growth at Windy City Wire 16% (10%

in 1H25); excluding Peerless, we estimate Controls organic growth was 11%. Seals

and Life Sciences grew organically by 2% and 4%, respectively. Management raised

FY26 guidance to 12% organic revenue growth (from 9%) and M&A contribution to 6%

(from 3%) with operating margin of c25% (unchanged).

Figure 1: 1H26 results showed Diploma’s resilience

Group revenue growth Segment organic revenue growth

40% 30%

35% 25%

30%

20%

25%

15%

10%

5% 10%

5% 0%

0% (5%)

(10%)

Organic growth YoY Headline growth YoY Controls Seals Life Sciences

Source: Company, BNP Paribas Equity Research estimates

Updating our forecasts

Organic revenue growth: We adjust FY26e organic revenue growth to reflect 1H26 and

revised guidance, which is mainly driven by stronger performance from the Controls

segment and Peerless, but also Windy City Wire. We raise organic revenue growth for

the group to 12% from 9% with growth in Controls moving to 19.5% from 14%. We tweak

Life Sciences growth slightly lower to 5% from 6% as growth slowed to 4% in 1H26 from

6% in FY25. We leave Seals growth unchanged at 2.5%.

More M&A in the mix: Diploma announced with the 1H26 results the closing of a further

six acquisitions so far in 3Q26 (vs four in 1Q26 and four in 4Q25) with a larger seventh

(CDM, interconnect solutions for US defence) pending regulatory approval. This drives