Diploma (AO) | Buy | CC feedbacks: exceptional FY26, but keeps FY27 grounded

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Diploma (AO) | Buy | CC feedbacks: exceptional FY26, but keeps FY27 grounded

ounding continues, but FY27 should move closer to the historical

high-single-digit / c.10% growth framework.

Margins: The 26.5% margin guide is very strong, but management clearly positioned it as close to the top end. FY27 margins

should moderate somewhat due to reinvestment in end-market exposure, organisational development, the assurance platform,

deliberate Peerless margin moderation and some acquisition dilution. Still, the important point is that margins remain

structurally strong, not that FY26 becomes the new base.

Controls / Peerless: Controls remains the engine, with double-digit growth across IS Group, Clarendon, Peerless and Windy City

Wire. Peerless demand remains unchanged, with healthy new-build backlog, refurbishment activity and spot-market conditions.

The moderation is mainly tougher comps and deliberate easing of spot pricing to drive more volume, not demand weakness.

Management expects Peerless growth to move back towards c.10% over time, with margins easing from today’s exceptional

levels. However, margins should remain structurally above the level at which Diploma acquired the business, which is important

for the FY27 margin debate.

Seals: Incrementally better than the release. Management said Seals accelerated in Q3 and expects a good Q4. North American

Seals remains very strong, while International Seals is still patchy but improving. This supports the view that Seals is moving from

a drag to a modest contributor.

Life Sciences: Markets remain tougher, with some product lifecycle refresh ongoing, and management now expects low double-

digit growth for the year. The tone was resilient rather than exciting, with the division continuing to benefit from prior investment