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Investing.com - Deutsche Bank upgraded Softcat Plc. (LSE:SCT) from Hold to Buy and raised its price target to GBP19.00 from GBP18.30 following the company’s strong fiscal year 2025 performance.
Softcat reported significant growth with gross invoiced income increasing 27% to £3.6 billion and gross profit rising 18.3% to £494.3 million. The company demonstrated accelerating momentum with gross profit growth of 12.1% in the first half followed by 23.9% in the second half, driven by larger solution projects.
Despite a 7.3% increase in headcount as part of ongoing investments, the company’s adjusted EBIT grew 16.9% to £180.1 million, exceeding both Deutsche Bank and consensus expectations. The company reported £7.2 million in adjusting items, primarily related to investments in new cloud-based sales and HR systems that could not be capitalized.
Softcat maintained strong cash performance with underlying cash conversion at 95.6%, resulting in a closing cash balance of £182.3 million compared to £158.5 million in fiscal year 2024. The company operates with no debt and has increased its operational cash floor requirement by 20% from £75 million to £90 million to accommodate its growth.
The company proposed a final ordinary dividend of 20.4p, bringing the total dividend per share for the year to 29.3p, representing a 10% year-over-year increase, and declared an additional special dividend of 16.1p compared to 20.9p in the previous fiscal year.
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