RBC Capital starts Melrose spinoff Dowlais at 'outperform'

Dowlais Group

55.80p

15:44 22/11/24

3.33%

1.80p

RBC Capital Markets initiated coverage of Dowlais on Wednesday with an ‘outperform’ rating and a "potentially conservative" sum-of-the-parts based 180p price target.

"We see Dowlais (the Melrose automotive spin-off) as a net winner in the EV transition, positioned to outgrow the underlying auto markets and significantly expand operating margins," RBC said.

"The business is underpinned by a dominant position in sideshafts, which alone can account for circa 90% of the group market cap today despite only being half of the group sales, such that the other circa 50% of sales appears nearly free."

At 1025 BST, Dowlais shares were up 1.1% at 126.40p.