Halma Share Price Gap Widens as Full-Year Revenue Tops £2.2bn

The Halma share price gap between operating performance and market reward has become difficult to ignore: full-year revenue for the year to 31 March 2025 reached £2,248.1m, up 11% on the prior year, while the stock has delivered barely a third of that revenue growth in price appreciation over five years.

Halma (LSE: HLMA) is a decentralised group of roughly 50 businesses making essential industrial equipment: gas detectors, fire sensors, water treatment systems. The acquisition model is straightforward. It buys small, high-margin companies in specialised niches with high barriers to entry, leaves them to operate independently, and recycles their cash into further deals. The compounding effect over decades has been substantial.

What the FY2024/25 results actually show

Halma’s full-year results for the year to 31 March 2025 were operationally strong across most measures. Adjusted EBIT came in at £486.3m, up 15%, with the Adjusted EBIT margin expanding 80 basis points to 21.6%. Adjusted earnings per share rose 14% to 94.23p. Cash conversion reached 112%, well above the company’s 90% target.

The Environmental and Analysis segment, which houses the photonics operations, led the group with revenue up 18.0% (organic: 19.0%) and Adjusted profit growth of 25.4%. Safety grew revenue 9.5% and Healthcare 3.2%, both positive but more modest contributions.

On capital allocation, the company completed seven acquisitions for £157m maximum total consideration during the year. Return on Total Invested Capital (ROTIC) rose 60 basis points to 15.0%, comfortably above both the 12% target and the weighted average cost of capital of 9.8%. Net debt to EBITDA fell to 0.97 times, from 1.35 times the prior year. R&D investment reached £108.4m, representing 4.8% of revenue.

A note on conflicting figures in wider circulation: some sources reference a record £475m spent on five acquisitions and 47 consecutive years of dividend growth. The primary FY2024/25 press release states seven acquisitions for £157m and records this as Halma’s 46th consecutive year of dividend growth of 5% or more, with a total dividend per share of 23.12p. The £475m and 47th-year figures appear in the FY2025/26 investor presentation, covering the subsequent financial year. The FY2025/26 results, available via Halma’s investor relations page, confirm revenue of £2,582m (up 15%), ROTIC of 16.2%, and a dividend per share of 24.74p, representing the 47th consecutive year of such growth and the company’s 23rd consecutive year of Adjusted profit growth.

The Halma share price gap and the photonics concentration question

Driving the Halma share price gap is a specific concern: a single hyperscaler technology company accounted for 19% of Group revenue in the six months to 30 September 2025, up from 14% in the equivalent period a year earlier, purchasing photonics solutions for data centre development. Reuters, via Yahoo Finance, reported that Halma lifted its full-year organic revenue growth forecast for FY2025/26 to the mid-teens percentage range on a constant-currency basis, from a previous forecast of low double-digit growth. Analysts at Stifel, cited by Proactive Investors, estimated Avo Photonics sales were running approximately 55% ahead year-on-year in that half-year period.

The concentration risk is legitimate and warrants careful consideration. Halma’s own analyst presentation describes Avo Photonics as supplying a small but critical component within a wider data centre solution, and the relationship with that customer spans over a decade. That longevity offers some durability. But a single customer at 19% of revenue is a figure that would be visible in the results if data centre spending were to cycle down.

The counterargument is that the photonics boom is the acquisition strategy working as designed, not a sign that the broader model is compromised. Safety and Healthcare, together accounting for more than half of group revenue in FY2024/25, continued growing without photonics-related tailwinds. The acquisition machine itself remained disciplined, as the half-year results also confirmed, with ROTIC running 110 basis points ahead of the prior year at 14.3% at the interim stage.

Valuation setup into the next period

Halma’s price-to-earnings multiple now sits below its three, five, and ten-year historical averages. The ten-year revenue compound annual growth rate stands at 12.3%, with an average Adjusted EBIT margin of 21.3% over that period. Firms that serially overpay for acquisitions do not sustain those numbers across a decade.

The Halma share price gap between revenue trajectory and equity performance could close from either direction. The shares re-rate upward as photonics concentration concerns fade, or earnings disappoint if that single hyperscaler relationship moderates and the rest of the group cannot compensate. The first half of FY2025/26, with organic revenue growth of 16.7% and Adjusted EBIT up 26.7% to £282m, argued for the former. The next test is whether Safety and Healthcare can sustain momentum if photonics normalises. That is the binary the market is currently pricing in.