MIDAS SHARE TIPS: Microlise, transport tech firm you can really dig

JCB is a phenomenal British success story. Based in the Staffordshire town of Uttoxeter, the group exports diggers worldwide and has a reputation for reliability. But breakdowns happen and, when they do, construction projects can be held up at enormous cost.

Fast-growing technology firm Microlise helps JCB and its customers to maintain vehicles more effectively and fix them swiftly if they do go wrong.

The group installs special kit in the diggers that warns users if something is amiss and identifies what has happened if there is a breakdown. The gadgets can already be found in about 250,000 diggers across the globe, including Antarctica. More are on order this year, as the technology can make a huge difference to JCB customers, especially those in faraway places.

The truck maker is just one Microlise customer. As a firm specialising in transport-related technology, the group works with almost every large retailer in the UK, helping them to optimise delivery routes, keep drivers safe on the road and ensure that fleets comply with regulations.

Microlise joined the junior AIM market in July 2021 at £1.35 a share. Today the stock is £1.13, yet businesses are clamouring for Microlise products.

Customers include all the major supermarkets, top retail chains such as Marks & Spencer, Next and DFS, and delivery firms from Royal Mail to DPD. Some firms use Microlise to work out routes from warehouse to store. Others rely on the Nottingham-based group to calculate how best to deliver goods to consumers’ homes.

The company’s software is used by more than 200,000 drivers in the UK and customers’ savings are extensive. Microlise is winning business overseas as well. Top Australian supermarket Coles is a customer, French firms are signing up and further expansion is expected across Europe and the Asia Pacific region.

Chief executive Nadeem Raza has worked at Microlise for nearly 40 years, joining as a software engineer and taking on the top job in 2008.

Knowing the business inside and out, he has helped the firm to develop a name for reliability, service and innovation.

Today, its technology is needed more than ever. Fuel costs are high, drivers’ wages are rising, companies are under pressure and regulations are extensive, from how fast drivers are motoring to whether vans are properly maintained.

Microlise can help on all fronts and once customers sign up they rarely leave. Contracts generally last for five years too, so Raza can predict base revenues several years in advance.

The firm was hit by a shortage of microchips in 2022 but brokers still expect a 5 per cent increase in annual turnover to £63 million with profits up nearly 9 per cent to £5 million.

Further steady growth is expected this year, with the pace increasing in 2024 as economic activity picks up, supply chain issues ease and the firm gains ground outside the UK.

Midas verdict: Microlise is a strong, well-run company offering a service that helps businesses to save money and operate more efficiently. Raza is also highly motivated to succeed, with just over 50 per cent of the shares, and he is keen to start paying a dividend as the business grows. At £1.13 the stock is a buy.

Traded on: AIM Ticker: SAAS Contact: microlise.com or 01773 537 000