It's full steam ahead at Spirax Sarco, analysts say

5th Mar 2015 10:32

Currency headwinds buffeted Spirax Sarco's profitability on a pre-tax basis, but analysts at Investec and Numis continue to see clear sailing ahead.The steam systems engineering group reported flat year-on-year growth in profits, which came in at £151.1m. However, that was the result of a 12% currency hit. Indeed, on an organic basis revenues expanded at a 4% clip, with another 1% coming from acquisitions.Investec analyst Michael Blogg pointed out how Watson Marlow, the subsidiary that manufactures niche peristaltic pumps, which service the food, pharmaceutical, chemical and environmental industries, continued to be the star performer as the unit moved towards direct sales in India instead of operating through a joint ventureNonetheless, there was also a "good story" in the steam business.Blogg further highlighted how the firm continues to be highly cash generative.The analyst said: "Today's news has all of Spirax's typically positive characteristics and investors should be very content with the group's progress. We expect estimates to rise a little and there will also be upward pressure on the share valuation."Numis admitted the rating was not cheap but with a 120p special dividend announced the current price provides "an all too infrequent entry point into this stock". It upgraded its rating from 'hold' to 'add'.The broker said Spirax was "a high quality business" and noted that despite industrial end markets that are expected to remain subdued and a further 2% currency headwind, "further progress is expected and increased investment should start to come through to the top and bottom line".