MRP: Dividend Momentum And Margin Recovery Will Drive Share Price Upside

Analysts have raised their price target on Mr Price Group to ZAR 257, a modest uplift that reflects slightly improved margin expectations and valuation multiples despite a higher assumed discount rate.

Analyst Commentary

Recent research commentary on Mr Price Group has turned incrementally more constructive following the upgrade to Buy, with the higher target price framed as a function of both improving operational execution and a still-reasonable valuation backdrop.

Bullish Takeaways

• Bullish analysts highlight that the upgraded price target embeds upside potential relative to current trading levels, suggesting the market is still underestimating the group’s earnings recovery trajectory.
• Improved margin expectations, particularly in apparel and value formats, are seen as achievable as input cost pressures ease and inventory management normalises, supporting healthier operating leverage.
• Commentary points to disciplined cost control and tighter working capital as key execution levers that can sustain free cash flow generation, reinforcing confidence in the dividend profile and overall shareholder returns.
• On growth, bullish analysts see Mr Price Group as well positioned to capture share from weaker competitors in a constrained consumer environment, with targeted store expansion and format refinement providing medium term volume support.

Bearish Takeaways

• Bearish analysts caution that the uplift in valuation multiples may already price in a substantial portion of the operational recovery, limiting further re rating if macro conditions remain weak.
• There is concern that elevated discount rates, reflecting heightened risk premiums in South African assets, could cap upside to the equity story even if near term earnings deliver in line with raised expectations.
• Execution risk remains a focus, with skeptics flagging the potential for renewed margin pressure should promotional intensity increase or supply chain disruptions re emerge, which could undermine the upgraded margin narrative.
• On growth, cautious views centre on the fragile consumer backdrop and load shedding related disruptions, which may constrain same store sales momentum and delay the realisation of the full earnings potential implied in the higher target price.

What's in the News

• Declared an interim gross cash dividend of 323.20 cents per share for the 26 weeks ended 27 September 2025, representing a 6.5 percent increase on the prior year (Key Developments).
• Shareholders subject to dividend withholding tax will receive a net dividend of 258.56 cents per share, after a 20 percent withholding rate is applied (Key Developments).
• The last date to trade cum dividend is 09 December 2025, with shares trading ex dividend from 10 December 2025 and a record date of 12 December 2025 (Key Developments).
• The dividend payment date has been set for 15 December 2025 (Key Developments).

Valuation Changes

• Fair Value: reduced slightly from ZAR 301.53 to ZAR 297.45, implying a modest decrease in the intrinsic valuation estimate.
• Discount Rate: risen slightly from 19.79 percent to 20.28 percent, reflecting a marginally higher required return and risk premium.
• Revenue Growth: effectively unchanged, moving fractionally from 7.70 percent to 7.70 percent, indicating stable top line growth assumptions.
• Net Profit Margin: increased marginally from 10.20 percent to 10.20 percent, signalling a very small uplift in long term profitability expectations.
• Future P/E: edged down slightly from 25.23x to 25.19x, pointing to a marginally lower forward earnings multiple in the valuation model.