Monadelphous Hits Record High After 81% Rally: Is It Too Late to Buy MND?

Monadelphous Group (ASX: MND) surged 11% on Monday to $25, capping an 81% rally over the past twelve months. The engineering and construction services company delivered half-year revenue of approximately $1.5 billion—up 43% from the prior period—and expects full-year revenue 20-25% higher than FY25. With $570 million in new contracts secured since the start of FY26, representing roughly a third of last year’s total revenue won in just a few months, the company has clearly hit peak momentum. For investors who missed the run, the question is whether chasing the stock at all-time highs offers reward or risk.

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Monadelphous Rides Tier-One Relationships to Record Pipeline

The surge stems directly from Australia’s resources sector firing on all cylinders, with BHP, Rio Tinto, and South32 driving sustained capital expenditure. What makes this particularly compelling is the quality of work:

BHP maintenance contracts: Preferred partner status for ongoing maintenance across Western Australian iron ore operations provides steady, recurring revenue
Dual revenue streams: Benefits from both sustaining capex (maintenance) and growth capex (expansions), creating visibility in a cyclical industry
Strong momentum: The $570 million pipeline represents 35-40% of FY25 revenue, won in just months

The resources boom appears genuine. Iron ore holds above US$100 per tonne, copper trades near multi-year highs on decarbonisation demand, and lithium has stabilised after its 2023 collapse. For Monadelphous, this creates exactly the environment engineering services companies thrive in.

However, the 43% revenue increase represents peak cycle performance. When resources capex inevitably moderates, Monadelphous will feel the impact. Engineering services are inherently cyclical, and assuming this growth rate continues would be unrealistic.

Kerman Acquisition Adds East Coast Diversification

In August 2024, Monadelphous acquired Kerman Contracting, expanding into civil construction and infrastructure on the east coast. Kerman specialises in rail, road, and earthworks, adding geographic balance and tapping into renewable energy transmission and urban infrastructure spending. While the strategic rationale makes sense, management hasn’t disclosed Kerman’s margin profile. If infrastructure projects operate at lower margins than resources maintenance—which they often do—the acquisition could dilute returns.

The Investor’s Takeaway for MND

At $25 per share, Monadelphous trades at approximately 19-20x forward earnings, a significant premium to its five-year average of 14-15x. The elevated multiple reflects genuine momentum but also suggests the market is pricing in sustained peak performance.

The case for holding:

• Strong tier-one relationships provide revenue visibility through 2026
• Kerman adds infrastructure diversification
• Resources capex cycle appears durable

The valuation reality:

• Much good news already priced in after 81% rally
• Trading at historical premium with limited margin of safety
• 43% growth is peak cycle—not sustainable long-term

We believe Monadelphous is a quality business riding a genuine boom, but at current levels, the stock appears fairly valued rather than cheap. Conservative investors should consider waiting for a pullback to the $20-22 range for better risk-reward. For existing holders, the fundamentals support staying put, but taking some profits after such a run wouldn’t be unreasonable. The bottom line: the easy money has likely been made.