Stock Analysis & Valuation De La Rue plc (DLAR.L)

• Previous Close: £130.00
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	64.70	-50
Intrinsic value (DCF)	39.20	-70
Graham-Dodd Method		n/a
Graham Formula	0.26	-100

Strategic Investment Analysis

Company Overview

De La Rue plc (LSE: DLAR) is a globally recognized leader in secure printing and authentication solutions, specializing in banknote production, identity verification, and brand protection. Founded in 1813 and headquartered in Basingstoke, UK, the company operates across three key segments: Currency, Authentication, and Identity Solutions. De La Rue serves governments, central banks, and commercial organizations worldwide, offering high-security printed banknotes, polymer substrates, tax stamps, authentication labels, and digital solutions like DLR Certify for government revenue tracking. With a presence in the UK, Middle East, Africa, Asia, and the Americas, De La Rue plays a critical role in the global financial and security infrastructure. Despite challenges in profitability, the company remains a key player in the specialty business services sector, leveraging its long-standing expertise in anti-counterfeiting and secure document issuance.

Investment Summary

De La Rue presents a high-risk investment case due to its recent financial struggles, including a net loss of £20 million in FY 2024 and no dividend payouts. However, its market position as a leading banknote printer and authentication provider offers potential upside if operational efficiencies improve. The company’s £252 million market cap and stable revenue (£310.3 million) suggest resilience, but high debt (£128.8 million) and negative EPS (-0.1) raise concerns. Investors should monitor restructuring efforts and demand for polymer banknotes, which could drive future growth. The stock’s beta of 0.968 indicates moderate volatility relative to the market.

Competitive Analysis

De La Rue’s competitive advantage lies in its long-standing reputation and expertise in secure printing, particularly in banknote production, where it serves over 140 central banks globally. Its polymer substrate technology and anti-counterfeiting features provide a technological edge. However, the company faces intense competition from private and state-owned security printers, as well as digital payment trends reducing cash usage. In authentication and identity solutions, De La Rue competes with firms offering digital alternatives, though its physical security products (e.g., tax stamps, ID components) remain relevant in emerging markets. The company’s financial instability (negative net income, high debt) weakens its ability to invest in R&D compared to better-capitalized rivals. Its geographic diversification helps mitigate regional risks, but pricing pressure and contract losses (e.g., UK passport deal in 2018) highlight vulnerabilities. A turnaround hinges on cost management and expanding high-margin authentication services.

Major Competitors

• Giesecke+Devrient (GIL): A key private competitor in banknote printing and security solutions, G+D boasts stronger financials and broader product offerings, including cash handling systems and digital payment security. Unlike De La Rue, it is not publicly traded, limiting transparency but giving it flexibility in investments. Its dominance in Europe and emerging markets poses a direct threat to DLAR’s market share.
• Crane Co. (CBR.F): Crane’s Currency segment (Crane Currency) competes in banknote substrate innovation, particularly polymer notes. Its US base and diversified industrial operations provide stability, but it lacks De La Rue’s global central bank relationships. Crane’s stronger balance sheet allows for aggressive R&D, though its focus is narrower in currency solutions.
• Spirent Communications (SPS.L): While not a direct competitor in printing, Spirent’s cybersecurity and authentication solutions overlap with De La Rue’s digital offerings like DLR Certify. Spirent’s tech-centric approach and profitability contrast with DLAR’s reliance on physical products, highlighting the latter’s need to adapt to digital trends.
• China Banknote Printing and Minting Corporation (CBPMC) (688023.SS): A state-owned giant, CBPMC dominates Asian banknote production with cost advantages and government backing. It undercuts De La Rue on pricing in tenders but lacks global reach. Its non-public status limits transparency, though its scale poses a long-term threat in emerging markets where DLAR operates.