Shares in Hardide (LON:HDD) soared after the advanced coatings provider upgraded FY26 guidance following strong Q3 trading and margin improvements.
Having doubled revenues ahead of schedule, the Bicester-based business introduced a new target of doubling revenues again in two to three years.
Trading ‘materially’ ahead
For the uninitiated, Hardide provides advanced coatings for internal and external surfaces. The company applies hard-wearing coatings to metal components using chemical vapour deposition, a process that builds up a protective layer atom by atom.
This process extends the life of parts used in ‘very aggressive’ environments. And the firm’s coatings result in cost savings for customers spanning the energy, valve and pump manufacturing, industrial gas turbine, precision engineering and aerospace industries.
Following strong Q3 trading and operating margin improvements, FY26 results are now expected to be ‘materially ahead’ of previous expectations. Before today’s update, analysts were forecasting revenues of £13.4 million and EBITDA of £4.3 million.
Hardide’s revenue increased to £4.1 million in Q3, taking year-to-date sales to £8.9 million. Growth has been driven by new contract wins, coupled with operational improvements that have increased factory utilisation and output rates.
Doubling down again
Hardide is confident of achieving its target of doubling annual revenues in FY26, significantly earlier than originally expected. Its next ambition is to more than double revenues again over the next two to three years.
This will be achieved by diversifying the customer base, growing existing key customers and developing ‘significant revenue potential’ with an unnamed Middle Eastern customer.
To support this growth, Hardide is investing in three new coating reactors at a total cost of £4.5 million. These should become operational in the latter part of FY27.
Following the update, Cavendish raised its FY26 revenue forecast by £100,000 to £13.5 million and its pre-tax profit estimate by £1.2 million to £4.6 million. For FY27, the broker forecasts a surge in pre-tax profits to £6.6 million on sales of £18.8 million.
AIM-listed Hardide has been a stellar performer over the past year. The shares have risen more than 1,000% on excitement surrounding its growth trajectory. Given these spectacular gains, only risk-tolerant investors would chase the stock here.
Nevertheless, the surface treatment tech specialist remains a compelling growth story. It has a burgeoning pipeline of new business opportunities that it is seeking to convert, including in new sectors such as semiconductors.
It is also helpful that the cost of tungsten gas has stabilised of late, albeit at higher levels than a year ago. Hardide has diversified its tungsten gas supply and secured around 50% of expected gas requirements for FY27, providing greater visibility and certainty.
‘With new FY28 forecasts showing strong momentum continuing, we raise our target price from 60p to 115p,’ enthused Cavendish. ‘With this new target supporting significant upside to the shares and today’s trading update expected to be taken well we reiterate our Buy rating.’
Read the press release here: https://www.hardide.com/investor-relations/share-price/
