Elior Group - So far, so good

Elior’s turnround is gathering pace with a near doubling of target recurring annual EBITDA synergies (€56m vs €30m) by 2026 following its April 2023 integration with Derichebourg (DMS). Also, with deleveraging the priority, net debt/EBITDA is expected by management to fall from 5.4x in FY23 to 4x in the current year and below 3x in FY26. Current momentum in terms of pricing, cost control, cross-selling and voluntary contract exits as well as an easing of inflationary pressures look to justify this confidence, with FY24 guidance of c 2.5% adjusted EBITA margin (up from normalised 1.9%) and organic revenue growth of 4–5% (focus on profit, not volume). Consensus FY24e EV/EBITDA of 5.9x reflects the early stage of recovery and lower guidance for H223 rather than potential upside from a turnround.