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UBS has reaffirmed its 'buy' rating on 3i Group PLC (LSE:III), the FTSE 100 investment company, pointing to fresh evidence that its most important holding is on the mend. The bank kept its price target at 3,200p, implying roughly 20% upside from the recent 2,675p.

3i Group PLC (LSE:III) successfully increased its core stake in retail business Action following a new share issuance and saw its forecasts updated by Deutsche Bank. The investment firm traded steadily at 2,822p as the broker maintained a 'buy' rating and raised its target price from 3,527p to 3,570p.

3i Group is a world-class compounder, with Action comprising 75% of NAV and driving robust growth. Action's dominant European discount retail model features high margins, rapid payback, and a negative cash conversion cycle, fueling self-sustaining expansion. Current 3i valuation implies a steep discount to Action's peers, despite superior growth, profitability, and cash conversion metrics.

3i Group remains unappealing due to the rising cost of capital and lack of catalysts, while asserted multiples don't shrink. TGOPF trades at a 10% discount to asserted NAV, but NAV relies on high, arguably unrealistic, multiple assumptions for the main business, Action. Public comps trade at a fraction of the multiple and have similar growth prospects.