Volution shares gained 7% to 654p after the ventilation specialist said trading in the opening months of its new financial year had been “robust”, alongside news of a £75 million Australian buy.
At its AGM, the group reported organic revenue growth of about 5% across all regions, despite what it called challenging market conditions.
Acquisitions contributed a further 25% or so, lifting total revenue growth to more than 30% in the first four months. Peel Hunt said margins on the core business look broadly unchanged from last year.
Volution also unveiled the purchase of ACI, an Australian ventilation supplier serving underground mines. The deal, funded from existing debt facilities, could rise to roughly £89.5 million once contingent payments are included.
ACI generated A$48 million of revenue and A$17 million of EBITDA last year, and Volution expects the acquisition to be earnings accretive in its first year. Group leverage is set to rise to around 1.8 times as a result.
Peel Hunt said it will update forecasts to reflect the deal but does not expect major changes to its view on the rest of the business. The broker added that the recent pullback in the shares looks like a buying opportunity. Its price target is 725p.