As of September 8, 2025, Serco Group PLC has a Discounted Cash Flow (DCF) derived fair value of $878.15 per share. With the current market price at $222.00, this represents a potential upside of 295.6%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $615.45 |
| DCF Fair Value (10-year) | $878.15 |
| Potential Upside (5-year) | 177.2% |
| Potential Upside (10-year) | 295.6% |
| Discount Rate (WACC) | 5.7% - 8.2% |
Revenue is projected to grow from $4787 million in 12-2024 to $8247 million by 12-2034, representing a compound annual growth rate of approximately 5.6%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 4787 | 2% |
| 12-2025 | 5031 | 5% |
| 12-2026 | 5177 | 3% |
| 12-2027 | 5408 | 4% |
| 12-2028 | 5550 | 3% |
| 12-2029 | 5883 | 6% |
| 12-2030 | 6345 | 8% |
| 12-2031 | 6713 | 6% |
| 12-2032 | 7196 | 7% |
| 12-2033 | 7909 | 10% |
| 12-2034 | 8247 | 4% |
Net profit margin is expected to improve from 1% in 12-2024 to 8% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 44 | 1% |
| 12-2025 | 151 | 3% |
| 12-2026 | 227 | 4% |
| 12-2027 | 310 | 6% |
| 12-2028 | 391 | 7% |
| 12-2029 | 491 | 8% |
| 12-2030 | 529 | 8% |
| 12-2031 | 560 | 8% |
| 12-2032 | 600 | 8% |
| 12-2033 | 660 | 8% |
| 12-2034 | 688 | 8% |
with a 5-year average of $32 million. Projected CapEx is expected to maintain at approximately 1% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 30 |
| 12-2026 | 31 |
| 12-2027 | 35 |
| 12-2028 | 38 |
| 12-2029 | 40 |
| 12-2030 | 42 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 43 |
| Days Inventory | 2 |
| Days Payables | 9 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 6M/2025 | 115 | 20 | 18 | 25 | 51 |
| 2026 | 328 | 61 | 38 | (10) | 239 |
| 2027 | 438 | 84 | 40 | 33 | 281 |
| 2028 | 545 | 105 | 41 | 19 | 380 |
| 2029 | 673 | 132 | 43 | 29 | 469 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 615.45 | 177.2% |
| 10-Year DCF (Growth) | 878.15 | 295.6% |
| 5-Year DCF (EBITDA) | 289.68 | 30.5% |
| 10-Year DCF (EBITDA) | 504.31 | 127.2% |
Is Serco Group PLC (SRP.L) a buy or a sell? Serco Group PLC is definitely a buy. Based on our DCF analysis, Serco Group PLC (SRP.L) appears to be significantly undervalued with upside potential of 295.6%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $222.00.