Made Tech (LSE:MTEC) isn’t a well-known penny stock. At 37p, it gives the company a modest £59m market-cap, means it’s flying under the radar of most investors.
But it has built a head of steam, rising 330% from a low of 8p in March 2024. Could Andy Burnham — the likely PM-in-waiting — act as a tailwind to push it even higher over the next couple of years?
What does it do?
Made Tech’s a provider of technology services to the UK public sector. It enables central government, local councils, the NHS, and housing authorities to modernise their computer systems, improve digital services, and make better decisions using data and AI.
Now, there are a few things I like here from an investment standpoint. For a start, Made Tech already has client relationships across various parts of the massive UK public sector.
Many of these departments need help to modernise technologically, which is fuelling strong growth at the company. In the 12 months to 31 May (FY26), revenue jumped 27% to £58.9m, slightly ahead of market expectations for £57.5m.
New logo wins included the Youth Justice Board, while work continued on the upgraded Met Office weather app and the Homes for Ukraine programme. In April, Made Tech was also awarded a three-year contract worth £19m with the Government Digital Service.
Additionally, the firm’s now profitable. Last year, adjusted EBITDA surged 69% to £5.9m, with forecasts pointing to a net profit of about £3.5m (full FY26 results are due in September).
Note that growth’s been achieved organically, but the company’s open to acquisitions to expand digital capabilities and the total addressable market. The balance sheet is immaculate, with no debt and net cash of £14.5m.
Burnham boost?
Turning to Burnham, reports say he will reassess the current AI strategy to “mainline AI into the veins” of the nation. So there’s some uncertainty around the role AI will play in the public sector under the next government.
Then again, Burnham’s scepticism seems to lie not with the technology itself but who controls it (particularly US tech giants). If there’s a move towards digital sovereignty and Burnham’s ‘Manchesterism’, this could see dozens of regional digital transformation projects and a need to upskill local council workers.
In this scenario, I think the company could continue picking up more contracts.
The UK public sector is entering a multi-decade AI transformation, creating a substantial long-term opportunity for trusted delivery partners like Made Tech.
Made Tech.
Worth a look?
One risk here is that the firm’s focused on the public sector, so there’s little contract diversification from private sector clients. There’s also competition with other public-sector digital consultancies.
Nevertheless, the stock looks good value to me, trading at 13.5 times forward earnings. That’s not high for a growth firm increasing revenue and profits by double digits.
Looking ahead, I think the digitisation of the public sector will continue for years, regardless of which PM is in office. And because these organisations face huge pressure to deliver more with limited resources, tech-driven efficiency will be vital.
Made Tech’s a direct play on these digitalisation trends, making this penny stock worth considering at 37p. One broker recently gave it a 60% higher price target.
Should you invest £5,000 in Made Tech Group Plc right now?
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Ben McPoland has no position in any of the companies mentioned.
