AG Barr is a leading UK beverage producer with a clear strategy for growth across its multi-brand portfolio, including IRN-BRU, Rubicon, and Boost. Revenue growth has reaccelerated to 5% in H226 and, with high operating margins of c.15% and excellent cash conversion, the group is well placed to grow organically and through acquisition.
As recently announced, the group has acquired the complementary brands Fentimans and Frobishers for a combined £51m, adding potentially c.10% to group revenues.
In this detailed report, we review the attractive investment thesis for AG Barr and conclude that successful execution of management’s strategy will drive a further rerating.
We initiate coverage with an 800p Fair Value estimate, equating to 1.7x EV / Revenues, c.16x PER, and a c.4.5% FCF yield (cal 2027).
