Victorian Plumbing Group PLC

Victorian Plumbing Group PLC (LSE: VIC) a constituent of the FTSE AIM UK 50 Index, is a leading United Kingdom-based online retailer specializing in bathroom products. The Company offers a one-stop-shop solution with over 36,000 products from more than 150 own and third-party brands, catering to both consumers (B2C) and trade professionals. This report covers the key recommendation rationale and conclusion for the stock.

Key Recommendation Rationale – Sell at GBX 82.00

• Statutory profit before tax declined 8% year-on-year: Despite higher revenue and EBITDA, reported profit before tax fell to £5.4mn (H1 2024: £5.9mn) mainly due to exceptional costs of £5.4mn, including warehouse transformation, closure of Victoria Plum, and professional fees from M&A. This indicates one-off expenses continue to weigh on statutory profitability, partially offsetting operational improvements.

• Significant cash reduction impacting liquidity buffer: Cash and cash equivalents dropped 70% to £10.9mn (H1 2024: £36.1mn), reflecting working capital movements, exceptional cash outflows of £10.2mn, and discontinued operations. While free cash flow generation improved to £12.9mn, the lower closing balance signals tighter liquidity headroom despite the undrawn £30mn revolving credit facility.

• Rising people costs and depreciation pressure margins: People costs rose 19% to £12.5mn, driven by wage inflation and warehouse staffing, while depreciation and amortization increased 17% to £2.7mn due to the new distribution center lease. These cost pressures constrained underlying operating leverage, limiting adjusted PBT growth to just 3% despite 6% revenue expansion.

• Macroeconomic Risk: The market sentiments can remain weak in the short term due to the subdued consumer disposable income, geopolitical tensions, and political risks.

Share Price Chart 

Valuation Methodology: Price/ Earnings Approach

Conclusion

VIC’s valuation may face pressure as the industry navigates regulatory hurdles, economic slowdown risks, currency volatility, potential U.S. tariffs, and intensified competition driving price wars. For conducting the valuation, the following peers have been considered: AO World PLC (LSE: AO), Wickers Group PLC (LSE: WIX), etc.

Given its current trading levels, the recent financial performance, strategic investments and partnerships, market expansion and cost optimization strategies, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the Closing Market Price of GBX 82.00 as of 22 October 2025.  

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 22 October 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.