Bathroom fit-out firm Norcos (NXR) continues to look undervalued as it progresses a plan to become a ‘one-stop-shop’ for bathroom fittings and accessories.

The Cheshire-based company, best known for its leading Triton shower brand in the UK, recently completed the £60m acquisition of profitable Irish shower screens business Merlyn. The deal was financed by a £31.4m share placing and a new £120m debt facility.

Chief executive Nick Kelsall tells Shares the company is looking at further deals to broaden its bathroom product offering.

Results for the six months to 30 September were resilient despite rising input costs in the UK and political instability in its other main market, South Africa.

Kelsall notes the latter has gone from being a ‘problem child’ for the business to a strong contributor to group profit.

The stock trades on a mere six times forecast earnings per share of 30.1p for the year ending 31 March 2019 and offers a prospective yield of more than 4.5%, based on Numis’ forecasts.

Notably these estimates have not yet been updated in the wake of the Merlyn deal which Numis advised on.

The main risks to weigh include a £52.1m pension deficit and its exposure to a slightly uncertain UK economic environment.

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