IG Group (LON:IGG), a leader in online trading and investments, has kicked off FY25 on a strong note with impressive results for the first quarter ending 31 August 2024. According to a trading update from Shore Capital, IG Group reported a robust Q1 revenue of £279 million, marking a 15% year-on-year (YoY) increase and a 2% rise quarter-on-quarter (QoQ). This solid performance highlights IG’s ongoing success in navigating both Over-the-Counter (OTC) and exchange-traded derivatives markets, alongside stable interest income on client money.
The report, led by Shore Capital’s research analyst Vivek Raja, notes, “IG affirms current market expectations. We are not changing our forecasts at this early stage in the current year ending May 2025.” With forecasts for earnings per share (EPS) at 105p, compared to a market consensus of 102p, the company’s outlook remains bright.
One standout metric from the report is the growth in net trading revenue, which rose by 16% YoY to £242 million (albeit the annual comparison is rather benign). This is accompanied by £37 million in interest income on client money, a 7% YoY increase. Though active client numbers saw a slight dip of 1% YoY, the broader client money balances remained robust at over £4 billion, showing the continued trust and stability within IG’s client base.
The update also sheds light on IG’s share buyback programme, which is progressing as planned. Of the £150 million programme announced in July, £75 million has already been completed. The remaining buybacks are expected to be finalised by January 2025, bolstering confidence in the company’s capital returns strategy.
Shore Capital is confident in IG’s trajectory, especially following CEO Breon Corcoran’s first full-year results in July, which indicated a strategy of evolution rather than revolution. This prudent approach has led to a positive response in the market, with the share price showing strong performance. The report suggests that IG Group is well-positioned to continue delivering value, with a forward P/E ratio of 9.3x for FY25F and an attractive dividend yield of 5%.
The outlook for the rest of the financial year remains cautiously optimistic. Event risk to stoke market turbulence. With stable interest income and continued event risk on the horizon, IG Group is expected to maintain its growth trajectory.
In Summary
IG Group has shown a solid start to FY25, and with strong trading revenue, stable client balances, and an ongoing share buyback programme, the outlook remains positive. As Vivek Raja noted in the Shore Capital report, “We expect the share price to respond well to IG’s last update.” Investors can look forward to further value as the company continues to balance growth and income generation.
