IPH had some issues with the Canadian segment during FY2025, but I think these issues are temporary. Lower NPAT margins were attributed to a temporary CIPO (the Canadian Intellectual Property Office) backlog caused by upgrades to the CIPO system (see my separate straw for details on the CIPO backlog issue).

Once these backlogs have cleared, and the planned cost savings have been implemented, this should boost both revenues and margins in Canada. Canada makes up 41% of IPH’s revenue, so any improvements here will be significant to overall margins and NPAT for the business. The market might not be seeing these current issues as temporary, so this could be an opportunity to buy a decent dividend paying business at a reasonable price.

However, the business has underperformed for 6 years now. EPS has grown by a mere 2% and ROE has declined from 18% to about 12.5%.I think we’ll see ROE begin to improve again this year and be back to about 14%-15% by 2027.

Source: Commsec

The current NPAT consensus for FY2026 is $84 million (8 analysts, Simply Wall Street). It would appear that consensus is based on the CIPO backlog clearing soon, the $8-$10 million in promised cost savings being realised, and some organic revenue growth. I think $84 million ($0.33 per share) is a reasonable NPAT assumption for valuation purposes.

PE valuation

Based on these estimates, and with the current share price of $3.66, IPH shares are trading of a PE of 14 times FY2025 earnings and 11 times FY2026 earnings. This is the lowest PE ratio in a decade. Until FY2025, the PE ratio was typically over 20. IPH no longer deserves a PE ratio of 20, but 11 seems too low.

Simply Wall Street

For valuation purposes I’m going to assume a PE of 14 and FY2026 EPS at 33 cps, or a valuation of $4.62.

Valuation using McNivens Formula

Assuming FY2026 EPS is 33 cps, and ROE lifts to 14% over the next year, a payout ratio of 90%, and a required return of 10% per year, I get a valuation of $4.35 which is only a 19% upside to the current price. However, if you add the 10% partially franked dividend, that’s a reasonable return in 12 to 18 months. I think this is possible.

Morgan’s valuation

In a note shared by James Mickleboro on 24 September 2025, the team at Morgans thinks that IPH could be an ASX dividend share to buy now.

It is an intellectual property (IP) services company that operates across the globe through brands such as AJ Park, Smart & Biggar, and Spruson & Ferguson.

Morgans highlights that "IPH's valuation is undemanding (<10x FY26F PE), however investor patience is required given the delivery of organic growth looks to be the catalyst for a sustained re-rating."

In respect to income, the broker is forecasting fully franked dividends of 37 cents per share in FY 2026 and FY 2027. Based on the current IPH share price of $3.73, this will mean dividend yields of approximately 10% for both years.

Morgans has an add rating and $6.05 price target on its shares.

https://www.fool.com.au/2025/09/24/buy-these-asx-dividend-shares-for-4-to-10-yields/

Held IRl and SM