Knights Group: Investment strategy paying off; undervalued growth

Equity Development6 days ago1:10

Knights’ FY26 results once again illustrate its increasing power as the leading consolidator in the premium, regional legal market. FY26 revenues rose an impressive 28% to £207.7m and FY26 Adj. PBT rose 19% to £33.2m, a strong 16% Adj. PBT margin, despite cost headwinds. Working capital improved again, to only 84 days “lock-up”, driving a reduction in leverage and underpinning a 17% increase in the FY26 total dividend to 5.63p per share (above our expectations). Encouragingly, FY27E has had a “positive start” yet Knights still only trades on 6x cal 2027 PER. We believe this undervalues Knights’ organic growth momentum and impressive acquisition track record. We raise our Fair Value/ share from 255p to 315p, equivalent to 7x cal 2027 EV/EBITDA and 10x cal 2027 PER.