FTSE 250 shares round-up: Vistry rallies, Chesnara, Volex

Funding cheer at Vistry Group (LSE:VTY) and the “unparalleled” dividend progress of Chesnara (LSE:CSN) today lifted their shares as FTSE 250 investors also eyed the data-centre exposure of incoming stock Volex (LSE:VLX).

Vistry rallied 47.4p to 316p after Homes England confirmed the housebuilder as one of 33 strategic partners for its Social and Affordable Homes Programme.

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The £350 million of grant funding to support 3,028 homes has given Vistry a timely boost as it seeks to deliver on the second-half recovery assumptions in a trading update last month.

The award is the largest possible in the initial phase of the programme and compares with the £278 million of total funding received by the company across the 2021-26 version.

As well as its own allocation, Vistry expects to deliver additional homes at pace by working with the other strategic partners, mayoral authorities and councils.

Morgan Stanley said today’s development was a welcome positive after the recent weak news flow, which included July’s forecast of a £30 million half-year loss.

The bank said: “We view the announcement primarily as de-risking, improved visibility and an expansion of the addressable funded pipeline rather than immediate earnings accretion.”

The next major catalyst for Vistry is likely to be on 24 September, when new chief executive Adam Daniels presents a strategic review alongside the half-year results.

He has already made organisational changes as the company steps up its focus on cash generation in order to bolster the balance sheet. Daniels said today’s announcement provided Vistry, its partners and the wider sector with a much-needed stimulus.

He recently bought £100,000 of the company’s shares at a price of 260p, which compares with the price of 700p seen as recently as February and more than 1,300p in September 2024.

Panmure Liberum has a price target of 625p, while counterparts at Peel Hunt recently said they intended to stay at 495p prior to September’s strategy update.

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The shares of 7% yielding Chesnara rose 13.5p to 343.5p after the UK, Netherlands and Sweden-focused administrator of 1.3 million life and pension policies lifted its interim dividend by 6% to 8.16p a share.

The payment due on 16 October featured a planned one-off step-up of 3% after January’s acquisition of HSBC Life significantly increased the scale of the group.

Today’s half-year results showed assets under administration jumped by 38% to £21 billion and operating capital generation by 79% to £96 million.

Chesnara was formed in 2004 and initially consisted of Countrywide Assured, a life and pensions book demerged from the estate agency group Countrywide. It has grown through 15 acquisitions, most recently that of HSBC Life.

A subsequent deal to acquire Scottish Widows Europe is expected to complete around the end of the year, subject to regulatory approval.

Panmure Liberum, which has a price target of 400p. said the company’s 22-year track record of dividend growth was unparalleled in the space of UK & European insurance.

However, it believes Chesnara should appeal to growth investors as well as income investors after noting plenty of firepower to self-fund another meaningful deal.

It added: “The stock’s attraction remains the 7% dividend yield, growing at about 3%, combined with the relatively insensitive and solid balance sheet which supports the predictable capital generation.

“The yield plus growth translates to a powerful total shareholder return over time, having compounded by more than eight times over the past 20 years.”

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Volex shares, which are expected to enter the FTSE 250 index in September’s quarterly reshuffle, jumped by a fifth after the maker of critical power and data transmission products reported a very strong start to its new financial year.

Organic growth of 28% in the four-month period reflected continued strong demand in the data centre segment, as well as broad-based growth across the company’s other key markets.

The update builds on the momentum delivered in the previous financial year, when Volex achieved its five-year plan one year early and said it was making excellent progress towards its $2 billion (£1.5 bilion) revenue and 12% operating margin medium-term targets.

The valuation today returned above the £1 billion threshold as shares rallied by 110p to 644p. However, they remain short of May’s peak of 695p and Peel Hunt’s new price target of 800p after the broker today lifted its 2027 operating profit forecast by 8%.

Volex completed its transfer from AIM to the main market in July, a move that should broaden the range of potential investors and pave the way for FTSE 250 index inclusion.