Givaudan Earnings: Outstanding EBITDA Margin Will Be Difficult to Maintain; Shares Expensive

Wide-moat Givaudan delivered solid first-half results, broadly in line with company-compiled consensus. Like-for-like sales growth was 12.5% for the period, driven primarily by volume growth of around 9%, with muted inflation-driven pricing. The adjusted EBITDA margin was 24.8%, 210 basis points ahead of last year. We are increasing our fair value estimate by 5% to CHF 3,200 per share after reflecting the robust first-half 2024 results in our short-term forecast. Despite this bump in fair value, we believe shares remain substantially overvalued, trading in 1-star territory. We don’t think this level of organic sales growth and EBITDA margin is maintainable for the group and we struggle to justify the current valuation of nearly 40 times 2024 consensus earnings.