SRG Global Ltd (ASX: SRG) shares have surged over the past year.
During this time, the ASX share has risen by almost 100%.
The good news is that following the diversified industrial services company's first-half results and an upgrade to its full-year guidance, Bell Potter believes there is still further upside on offer.
Here's what the broker is saying.
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Solid first half, modest miss
The ASX share reported a 20% increase in underlying group EBITDA for the first half. While this was strong, it was slightly below Bell Potter's expectations. The broker said:
SRG reported underlying Group EBITDA of $71.0m, up 20% YoY, and 3% below BPe. 1H FY26 financial result: Group EBITDA and EBIT(A) missed our expectations by 3% and 4%, respectively, driven by weaker than forecast E&C revenue and EBITDA margin.
Importantly, excluding the recently acquired TAMS business, the base Maintenance & Industrial (M&I) business continued to perform strongly. Bell Potter notes:
Stripping out TAMS revenue and our expectation of EBITDA from the M&I segment financials, the base M&I business delivered revenue of $470.7m (BPe $463.2m), up 21% YoY, and EBITDA of $64.9m (BPe $64.6m), up 14% YoY.
Guidance upgraded
The key takeaway from the result was the upgrade to the ASX share's full-year guidance. Bell Potter said:
FY26 guidance: Group EBITDA guidance was upgraded to $164-168m (previously >$163.0m; BPe $163.8m; VA $163.5m). Group EBIT(A) guidance was raised to $126-130m (previously >$125.0m; BPe $125.2m; VA $125.7m).
The broker acknowledges that the midpoint of the upgraded EBITDA guidance implies a heavier weighting to the second half. This is largely due to a greater contribution from TAMS compared to the two months included in the first half.
Should you buy this ASX share?
According to the note, the broker has responded to the half-year result by retaining its buy rating and lifting its price target to $3.15 from $3.00.
Based on its current share price of $2.79, this implies potential upside of 13% for investors over the next 12 months.
In addition, a 2.3% dividend yield is expected, boosting the total potential return beyond 15%.
Commenting on its buy recommendation, Bell Potter said:
Our upgraded Target Price implies a NTM PE(A) of 21.2x (a 17% premium to the Industrials Services peer group). This premium is justified given management's consistent track record for delivering acquisition accretion, organic business EPS(A) growth, managing execution risk, and sustaining a high proportion of recurring work compared with other companies in the peer group with greater exposure to lumpier, project-based work revenue.
