DV Capital | Ashtead | Down 60% with 150%+ Upside
Ashtead Technologies represents a unique opportunity in energy to benefit from the AI boom with a quality company.
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This article covers Ashtead Technologies (AT.L). A subsea equipment rental company with an unmatched offering down over 60% from 2024 highs.
They have growth in the pipeline with structural tailwinds, a strong balance sheet, and sit in the unloved and overlooked energy sector. What’s not to love?
Let’s walk through what they do, why they’re interesting today, the risks that matter, and how I’m thinking about the upside from here.
This is not a company I currently own. It’s an idea I thought was worth sharing.
To read my full disclaimer, click here.
TLDR
What They Do
Ashtead rents specialized subsea equipment used across offshore energy projects. With over 30,000 assets spanning oil, gas, and offshore wind, customers avoid large capital purchases and operational complexity. Ashtead’s main competition is customer ownership, not other rental firms.
Why it’s Interesting
Ashtead has a strong balance sheet, disciplined management, and long-term demand tailwinds from offshore energy activity. Contractors are increasingly shifting from owning equipment to renting full packages, which favors Ashtead’s scale and one-stop-shop model. Returns on capital have been consistently strong, and recent cash flow pressure appears temporary, driven by elevated capex and working capital tied to growth.
Risks
The main risks are acquisition execution, temporary geopolitical disruptions, and cyclical oversupply during offshore downturns. Tariffs are largely passed through and are not a structural issue.
Valuation
Valuing Ashtead out to 2028, assuming 8% annual revenue growth and normalized margins, implies ~£44M of free cash flow. At a 17x multiple, this suggests ~915 GBX per share, or ~186% upside from today.
This is a strong opportunity but it didn’t clearly beat out existing holdings to earn a spot in the portfolio.
What Does Ashtead Do?
Ashtead Technology is a specialist in subsea equipment rentals and technical support. Founded in 1985 and based in the UK, they have built the largest fleet of rental equipment and tools for offshore energy operations in the world.
They own more than 30,000 assets used throughout the life of an offshore project. From installation and inspection to maintenance, repair and decommissioning.
85% of Ashtead’s equipment can be used in both oil‑and‑gas projects and offshore wind farms. This versatility allows the company to move assets easily as demand shifts and helps it benefit from the growth of renewable energy without abandoning oil‑and‑gas.
The firm acts as a bridge between manufacturers and contractors. It buys high‑specification gear from original equipment manufacturers (OEMs) such as Teledyne, Kongsberg and Saab, then rents that equipment to survey companies, subsea construction firms and energy producers.
Renting is attractive because the equipment is expensive, both initially and to maintain, and owning it requires highly trained engineers for calibration and maintenance. Rental turns large capital purchases into operating costs and ensures that tools arrive calibrated and compliant.
Ashtead maintains calibration labs and logistics teams in 9 regional hubs accross the globe. A workforce of about 650 people supports customers from these hubs.
Ashtead organizes its business into 3 segments:
Survey and Robotics (60% of Revenue)
This segment includes advanced sensors, autonomous vehicles, and positioning systems used to map and “see” the subsea environment.
Geophysical and hydrographic instruments produce detailed seabed maps for site surveys and pipeline inspections, while high‑definition cameras, laser scanners and sonars capture imagery inside structures. Environmental and metocean sensors record currents, waves and ecological conditions.
Mechanical Solutions (35% of Revenue)
This segment covers the heavy equipment needed to build, maintain, and dismantle subsea structures.
It includes dredging and cutting tools to remove sediment or cut through pipelines, coating-removal systems to prepare surfaces for inspection, and lifting, pulling and deployment equipment.
Asset Integrity (5% of Revenue)
This segment focuses on monitoring and extending the life of existing infrastructure.
Sensors and software track loads, motions and structural health of moorings, risers and wind‑turbine foundations. Three‑dimensional imaging and metrology tools measure the geometry of subsea components for repair work, and remotely operated or autonomous platforms gather data where it is unsafe for divers.
Industry and Business Model
Ashtead serves a very specific need that every subsea energy project has. They need to understand what is happening under the water. The issue is that the options available to do that are not great.
One option is to buy the equipment outright. That usually means spending millions of dollars on highly specialized tools that may only be needed for a short period of time. The equipment might be used for a few months and then not again for another six or more. On top of that, the company then has to store, maintain, and transport sensitive equipment that requires constant attention.
The second option is to rent from multiple providers. In practice, that can mean working with three or four different rental companies just to assemble everything needed for a single project. While this avoids the upfront capital spend, it creates a coordination problem. If one supplier is late, short on availability, or slow repairing equipment, the entire project can be delayed.
This is where Ashtead fits in. They offer a single rental platform that covers a wide range of complex subsea equipment. Today, there is no other provider operating at a similar scale. The market remains fragmented, and Ashtead has grown largely by acquiring smaller competitors that come close but lack the same breadth.
So when survey companies or energy operators decide it makes more sense to rent rather than buy and operate the equipment themselves for large projects, Ashtead often becomes the default option.
That is because the company’s primary competition is not another rental platform. It is customer ownership of the equipment. As more operators focus on capital efficiency and flexibility, that ownership model continues to lose its appeal.
At one point in my research, I asked why the equipment manufacturers do not simply rent the equipment themselves. The problem is that most manufacturers only produce a narrow set of tools and not the full suite required for these projects. Renting equipment globally also adds logistics, maintenance, and operational complexity that many manufacturers have no interest in taking on. Selling the equipment outright is far simpler.
On its first 2025 conference call, Ashtead estimated the replacement cost of its equipment fleet at roughly £350M. Reaching that level of scale would be unrealistic for all but the most well-capitalized players. And so far, none appear willing to try.
Why They Are Interesting
Balance Sheet
As with any stock that is down you first need to establish they have the runway to turnaround. Ashtead is rock solid here with £82.35M against essentially no short term debt and £142.4M in long term debt due in 2-3 years.
They are undergoing a temporary margin squeeze today but in a normalized environment will generate tens of millions in FCF meaning I have absolutely no concerns from their balance sheet.
Management
Ashtead’s CEO Allan Pirie has a business and finance background graduating from Robert Gordon University with a degree in business studies and later being certified as a chartered accountant by KPMG in 1998.
His first role in the early 2000’s was with ASCO, a logistics and supply‑chain specialist to the offshore industry. In 2004 he transitioned to Viking Offshore Services, a North-Sea emergency response company, where management there stated,
“Since joining the company, Allan has played a pivotal role in developing our business plan, refinancing the company and successfully negotiating new-build vessel contracts.”
After Viking in 2008 he was offered his first role in senior management as the CFO at Triton Group, a subsea technology company with direct relevant experience for Ashtead.
It was only the next year in 2009 when Allan was brough on as the CFO for Ashtead and in 2012 when leadership was restructured and he was moved to the CEO position.
His track record now with Ashtead really speaks for itself.
4x Revenue growth from £42M in 2020 to £168M in 2024.
Several acquisitions to gain and cement market share while maintaing a solid balance sheet.
Strong and sustained operating income margins, excluding Covid.
I believe his background in finance and as a CFO gave him exactly the experience needed to negotiate and execute acquisitions while maintaining a rock solid balance sheet.
He also owns about 1.6% of the company which is not massive but still meaningful. Overall I think Allan is a very solid manager with especially good skills in a CEO main job, capital allocation.
Growing Top Level Demand
Over the coming years energy demand and especially offshore energy demand is expected to keep growing at a solid pace which will mean continued organic growth for Ashtead.
There may be bumps in the road based on commodity prices and geopolitical tensions but in the end the work will still need done to meet global demand.
Tier 1 contractors are hired by the energy companies to manage projects such as:
Undersea mapping and Surveys
Installing Wellheads and Laying Pipelines
Setting Up Platforms
Connecting Platforms and Pipelines
It is these Tier 1 contractors that then rent out the equipment from Ashtead to perform much of the survey work, maintenance, dredging and much more. And today we see backlogs of tier 1 contracts continue to grow with good visibility out to 2027.
When their backlogs are high it means good things for Ashtead.
Switch to Renting Demand
Ashtead’s customers, the contractors, own about 65% of the equipment currently but they are switching to renting to be more capital efficient. It is costly to buy and maintain millions in equipment that is only in use a few months of the year so over the last few years they are switching to rent.
Even the companies that already own lots of equipment often don’t own the full suite they need. So they decide to not use their equipment and rent everything in a customized package for their needs. According to management some of their biggest customers also own a lot of equipment.
Solid Returns on Capital
Since 2018, apart from 2020, Ashtead has a solid history of high returns on capital putting numbers behind the capital allocation job being done by management.
Improving Profitability
In 2024 and the first half of 2025, profitability has been skewed by working capital and capex tied to acquisitions. These are largely one-off or timing-related effects rather than a reflection of steady-state economics. As these pressures ease, free cash flow margins should better reflect the underlying business.
In 2024, capex increased roughly 50% versus 2023 and is expected to rise again in 2025, though at a much slower pace. What weighed most heavily on results is that a large portion of this spending was pulled into the first half of the year.
Beyond 2025, management has guided to capex running at roughly 14% of revenue. Had capex been at that level during the first half of 2025, free cash flow would have been higher by approximately £6.6M. This suggests the current period is elevated relative to what management views as more normal spending levels.
Working capital has been the other major headwind. In contrast to prior years where working capital was neutral or even a tailwind, 2024 saw a £19.3M outflow, followed by an additional £9M headwind so far in 2025.
Some level of working capital investment is expected in a growing business, but the magnitude here has been unusually large. At year-end 2024, management indicated they expect working capital to settle into the low double-digit percentage of revenue range, broadly in line with capex levels around 14%.
At that level, current assets minus current liabilities would be closer to £28M. Today, that figure stands at roughly £47M, highlighting how much of the working capital impact has already been pulled forward. While it will take time to unwind, this points to normalization rather than a permanent drag.
Another piece worth watching is the deliberate cutting of low margin business. In H1 2025, proforma revenue fell 6%, largely because management reduced cross-hire activity and prioritized higher margin work, alongside some one-time project timing and geopolitical disruptions. The important part is that margins held up and even improved through this period. That is a sign they are willing to sacrifice low quality revenue to protect profitability.
Taken together, recent cash flow pressure appears driven more by timing and integration effects than by a deterioration in the business itself. As working capital normalizes and capex moderates toward management’s longer-term targets, cash generation should become more representative of the company’s underlying earnings power.
Scale
While this has been touched on briefly already, it’s worth looking more directly at Ashtead’s key advantage over the competition.
Ashtead owns a fleet of over 30,000 pieces of equipment with an estimated replacement cost of £350M. They are the only true one-stop shop for customers that need access to a wide range of subsea equipment anywhere in the world. This allows contractors to simplify execution and reduce risk, rather than coordinating across multiple suppliers and geographies.
Some estimates place their share of the survey and robotics rental market at roughly 50%, its largest and most important segment. Based on my research, there is really only one comparable competitor today, Unique Group.
Finding precise up-to-date figures is difficult given they are private out of the UAE, but Unique Group’s own website lists roughly 1,200 pieces of equipment available for sale or rental. That is far smaller than Ashtead’s fleet, though Unique appears to be working toward an offering similar in ambition to Ashtead’s. They operate across 18 global locations, giving them broader reach than most regional competitors.
Even so, Unique’s offering is not as deep or as comprehensive as Ashtead’s. Especially in core survey and robotics rental, where Ashtead’s scale and specialization remain unmatched.
Along with the size of the fleet comes the scale of Ashtead’s engineering and support teams. Contractors have 24/7 access to technical support to keep equipment operating in the field. For projects that can run for months or even years, minimizing downtime is critical.
Lastly, Ashtead’s scale allows it to be better capitalized than most competitors, particularly when it comes to holding spare parts inventory. One example management highlighted was customers waiting up to 35 weeks for manipulator repairs on subsea equipment simply because no supplier had parts available.
Because of its capital base, Ashtead was able to stock critical parts and now completes these repairs in just 3-4 weeks. That difference is huge for customers operating on tight project timelines.
So if a customer chooses not to work with Ashtead, what are the alternatives?
One option is renting from multiple suppliers at once, which introduces additional execution and timing risk, along with the complexity of negotiating with several parties and coordinating responses when something goes wrong.
The other option is purchasing potentially millions of pounds of equipment and building an internal team to manage it for a single project.
Neither are a good option.
Risks
Execution
Ashtead stands at the door of great opportunities ahead and has been meeting them through organic growth and acquisitions. I expect that to continue going forward but their especially heavy acquisition lead growth introduces management complexities that we can’t overlook.
If Allan and other on the management team overpay for a company or are unable to successfully integrate those they have purchased recently it will cause cost overruns, hurt margins, and customer relationships.
I believe Allan’s finance background means he is more cynical by nature than pure bred CEO’s who rose based on optimism and laying grand plans. This has led to very good and profitable acquisitions for the company so far. And leads me to believe they will continue.
It is worth noting as well they have been buying up their largest available competitors so future acquisitions could likely continue to be small bolt on and even if they go wrong it will be far less impactful than doubling the size of the company.
Geopolitical
As seen during 2025 geopolitics can have an impact on revenues and especially sentiment. In early 2025 Trump froze wind projects in the US and escalations earlier in the year between Israel and Gaza caused delays and stoppages in the middle east.
Both had an effect on revenues but they were short lived. Management noted that these delayed contracts from the first half of the year had already started back up or began by August.
In the end the work of maintaining and building out energy infrastructure is not optional. The work has to be done. Delays will happen and management even noted these temporary issues were not out of the normal for them.
We may see more events like this in the future but I expect they will be just as we say here. Delaying revenue not removing it.
Tariffs
Management stated that clauses are being built into contracts so it is largely pass through and has not had much affect. So far they think navigating tariffs have cost them £0.5M in 2025.
No growth in revenues has been recognized from tariffs yet either but will start in the second half of the year.
For Ashtead tariffs are not a risk, they will simply pass them through to their customers.
Oversupply of Machinery
Much like offshore drilling rigs this industry has potential for periods of oversupply within parts of the subsea services ecosystem, particularly during prolonged offshore downturns.
History shows that when offshore activity contracts sharply, capacity can build faster than demand falls, leading to lower utilization and pricing pressure. This was most visible after the 2014 oil downturn, when segments adjacent to Ashtead’s markets, such as ROV services and vessel-based subsea work, experienced clear oversupply dynamics and depressed day rates.
Ashtead’s rental model is more asset-flexible and less exposed than vessel-heavy operators, it is not immune to industry-wide slowdowns if too much equipment chases too few projects.
Today with demand growing I do not see this being a near term issue but is one to keep in mind. Especially when finding equipment figures is incredibly difficult sometimes.
Valuation
Please note this is NOT a company I own. This is an idea I thought worth sharing.
Ashtead is an incredibly interesting company with solid medium and long term prospects. Because of recent margin pressures and geopolitical concerns it will take time to regain investor confidence and for profits to climb to normalized levels.
Because of that time needed I am looking out to year end 2028.
Revenue
First forecasting revenue I believe we will see continued very solid growth for Ashtead. Forecasts show a midpoint of £210M in revenue for 2025 suggesting about £110M for the second half of the year.
From there I will project high single digit organic growth of 8% per year and assume no further acquisitions are made. This would mean Ashtead grows at the high level market pace according to their own estimates and no further transition occurs from contracts to renting instead of buying. Along with the point that they take no more market share.
I think both of those are likely to contribute to growth but we will stay conservative.
2028 Revenue: £264.5M
Margins
Here is where the real key for Ashtead will be, margin expansion. By 2028 I expect them to be to a normalized working capital level, only a small headwind, and 14% of revenue as Capex per management medium term guidance.
To get a baseline lets look at 2022-2024 OCF margins adjusted for working capital:
2022: 32.38% OCF Margin
2023: 33.71% OCF Margin
2024: 28.25% OCF Margin
HY 2025: 33.45% OCF Margin
Over the last few years you can see margins adjusted for working capital, which were tailwinds in 2022 and 2023 vs headwinds in 2024 and HY 2025 have actually be fairly consistent. Averaging 31.95% over this time.
I will assume there is some working capital headwinds as the catch up to recent pull forwards and pull this down to just 30.5% which assumes £4M working capital headwind.
Finally our last adjustment is to factor in Capex which management has already guided to be 14% over the medium term. Landing us with a 16.5% FCF margin.
2028 FCF: £43.64M
Multiple
Our final assumption is multiple. Given Ashtead history of mid teens returns on capital and solid growth I believe a 17x or around market average multiple is very reasonable.
Expected Returns and Final Thoughts
Modeling 0 change in share count from today of 81.12M shares this implies the following:
2028 Market Cap: £741.88M
2028 Share Price: £9.15 or 915 GBX
From todays price of 320 GBX this is a 186% return or a 42% CAGR over the next 3 years.
Despite that upside, Ashtead is not currently a position I own. I do think this is a really solid opportunity and one that stands up well on its own merits.
The reason it is not in my portfolio is simply opportunity cost. When I compared Ashtead directly against what I already own, it was not clearly better. I was not willing to sell something I already own to make it a position.
That does not change the quality of the business or the attractiveness of the setup. It just means that, for now, it sits just below the line. If you are looking for opportunities with energy exposure that are not directly correlated to commodity prices this is a very solid option.