Nichols shares have fallen 16% since in-line H1 results, despite no changes to forecasts or surprises. The share price reaction looks punitive given delivery momentum, strong balance sheet and unchanged estimates. With a 44/56 H1/H2 split (vs 46/54 LY), the earnings profile offers no obvious risk. H1 execution was solid: LFL revenue +4%, EBIT +4%, margin +30bps to 15.9%, net cash +£8m to £61.6m and ROCE +330bps to 30.4%. ERP go-live, UK resilience and strong Africa growth (+29% LFL) underscored ongoing delivery against CMD priorities. At 17x FY25 P/E (16x FY26) and 11x EV/EBITDA (10x FY26) vs LR averages (21x/14.5x), valuation is compelling. With a potential 6% special DPS yield in FY26 and a 3% ordinary yield, the prospective c.9% total yield underpins our view that current levels offer an excellent entry point into a high-quality, defensive growth stock with an 8% 5-year EPS CAGR. Buy.
