SDI Group (LON:SDI) is making confident strides in the world of specialist industrial equipment, with its latest acquisition of Collins Walker positioning the company for growth in the booming electric boiler market. Cavendish’s Director of Research, David Buxton, describes this move as a strategic and value-enhancing addition to SDI’s already robust portfolio.
The £1.85 million deal sees SDI Group welcoming a small yet profitable manufacturer of bespoke electric boilers. With a clear focus on high-growth, energy-intensive markets like healthcare, brewing, and industrial processing, Collins Walker’s technology aligns neatly with growing demand for low-emissions solutions spurred by net zero regulations.
What makes this acquisition particularly compelling is the financial prudence behind it. Cavendish notes that the acquisition was made at around 5.9x EBIT—well below the group’s historical average of 6.4x. David Buxton writes: “There are clear indications the business could deliver considerably better growth and returns under the group’s ownership.”
As part of the integration strategy, Collins Walker will become part of SDI’s Industrial & Scientific Products division, working closely with Applied Thermal Control. SDI plans to streamline back-office functions and expand production capacity. The potential for collaboration with LTE Scientific, which uses electric boilers in its autoclaves, further enhances the synergy potential.
In terms of financial outlook, Cavendish has modestly upgraded its FY26 estimates: adjusted profit before tax rises by £0.1m to £9.5m, and EPS increases 1.2% to 6.9p. The firm continues to see significant value in SDI shares, maintaining a target price of 135p—offering a substantial upside from the current price of 49p. At a P/E of just 7.1x and a free cash flow yield of 16%, the valuation looks highly attractive.
On a Final Note, SDI Group’s acquisition of Collins Walker exemplifies its strategy of smart, bolt-on deals that strengthen its market position while delivering shareholder value. With operational synergies and a regulatory tailwind behind it, the future looks promising for this acquisitive innovator.
