Royal Mail PLC (LON:RMG) is set for a return to London’s FTSE 100 blue-chip index in an upcoming reshuffle.
After a two-and-a-half year absence the British postal company will again find itself among the ‘top 100’ stocks in London.
The ascent of Royal Mail shares - at 597p the share is up some 74% in the year to date - comes as the company emerges as something of a ‘Covid winner’, thanks to surging parcel delivery volumes triggered by online shoppers and after workers backed down in a long-running dispute for fear of unemployment amidst the pandemic.
It’s the latest stamp of approval for Royal Mail in the City this week after Monday’s “just buy it” note put out by analysts at JP Morgan.
JPM analysts hiked their price target to 801p from 685p whilst highlighting that the postie had enjoyed a “sharply better” price mix, due to higher parcel volumes vs letters, and had confirmed material year-on-year cost savings.
The bank also said the company’s UK business had delivered a margin of 9.8% during the year, although the segment “doesn’t need to generate a margin of anywhere near 9.8% for Royal Mail to be materially undervalued”.
As Royal Mail looks set to join, healthcare engineer Renishaw is pencilled in for relegation when the FTSE 100 constituents are officially redrawn on June 2 – at present, index provider FTSE Russell has published the indicative results of its quarterly review for the London benchmark.
New floats flood the FTSE 250
Elsewhere, recent stock market floats Trustpilot Group Plc (LON:TRST), MoonPig Group Plc (LON:MOON) and Auction Technology Group PLC (LON:ATG) are marked for inclusion into the FTSE 250.
In March, Trustpilot floated in the choppy wake of Deliveroo’s IPO, nonetheless, its debut performed much better than the food delivery group. Having raised £473mln in the share sale Trustpilot’s IPO valued the consumer review firm at £1.1bn, with a share price of around 296p presently its market cap now stands at around £1.21bn.
Moonpig raised £491mln in its February IPO, valuing the online greetings card business at £1.2bn, and the current price of 460p gives it a market cap of £1.57bn.
Auction Technology Group Plc meanwhile raised £272.7mln raised in mid-February gave online auctioneer a £600mln value, and today’s price of 1,038p makes its market value £966mln.
Another pending addition to the FTSE 100 may be Volution Plc, a manufacturer and fitter of sustainable and healthy ventilation systems. Along with its pending inclusion in the 250 the shares also carries the London Stock Exchange’s ‘green economy’ badge, identifying it as a business that derives 50% or more of its revenue from environmental solutions.