L1 Group lifts James Hardie stake after March slide, citing valuation and resilience
Australian fund manager L1 Group has increased its investment in James Hardie Industries after the ASX-listed building materials company’s shares fell more than 20% during March, saying the pullback has left the stock trading well below its long‑term valuation range.
L1 said a sharp rise in market volatility—triggered, in its assessment, by the “Iran War”—sparked a broad sell-off in equities. The firm said it is using this period to identify high‑quality companies trading far below fair value, even under a less favourable macro outlook.
James Hardie, a leading producer of fibre-cement siding, composite decking and building solutions, is among its picks. According to L1, James Hardie and its peers retreated on concerns about higher interest rates and expectations of softening demand, leading to a sector de‑rating toward bottom‑of‑the‑cycle valuations.
The manager sees a good prospect for returns from a future normalisation of interest rates and/or improving consumer confidence. It also suggested the company has no direct impacts from the “Iran War,” noting that about 80% of its sales are generated in North America.
On valuation, L1 said James Hardie offers strong earnings growth potential while trading on a forward price/earnings ratio of around 15 times, compared with a 10‑year average of roughly 21 times. The stock fell to an even lower multiple during the high‑inflation period of 2022 but has largely traded above 15 times since early 2023, the firm noted.
The view comes alongside a solid recent track record at L1’s listed investment company, L1 Long Short Fund, which delivered an average net return per year of 15.9% in the three years to March 2026, outperforming its benchmark by an average of more than 6% per year.
Separately, James Hardie remains well regarded by the broader market: 15 analysts currently rate the shares a buy, according to CommSec. L1 said it will continue to look for opportunities created by heightened volatility, focusing on companies it believes are trading below fair value despite a cautious macro backdrop.