Keller Group — CMD establishes medium-term ambitions

Keller Group (LSE: KLR)

Last close As at 21/10/2026

GBP31.92

▲ −58.00 (−1.78%)

Market capitalisation

GBP2,175m

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Research: Industrials

Keller Group — CMD establishes medium-term ambitions

Keller’s CMD set out targets of 5–7% organic revenue CAGR, a c 7% operating margin, c 30% ROCE and c £800m cumulative free cash flow over 2026–30, alongside dividend cover of 2.5–3.5x. The event outlined the growth opportunities, operating discipline and capital allocation framework supporting these ambitions. Management also confirmed that FY26 trading remained in line with expectations, maintaining the upgraded FY26 outlook reiterated at the August interims, when company-compiled consensus stood at £3,337m revenue and £242m underlying operating profit.

Written by

Harry Kilby

Analyst

Industrials

QuickView

22 October 2026

Price 3,192.00p
Market cap £2,175m
Price Performance
Share details
Code KLR
Listing LSE

Shares in issue

68.1m

Net cash/(debt) at 30 June 2026

£(15.9)m

Business description

Keller Group is a UK-based specialist geotechnical contractor serving the commercial, industrial, infrastructure, power, institutional and residential sectors. Its capabilities span ground improvement, grouting, deep foundations, earth retention and marine works, alongside instrumentation and monitoring.

Bull points

  • Infrastructure and data centre investment supported organic growth.
  • Strong cash generation provides capacity for acquisitions and shareholder returns.
  • Geographic and sector diversification broadened growth opportunities.

Bear points

  • Project timing could lead to uneven revenue growth.
  • Stable margin targets leave profit growth dependent on revenue.
  • Bolt-on M&A depend on suitable opportunities at disciplined valuations.

Analyst

Harry Kilby
+44 (0)20 3077 5700

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Revenue growth-led earnings progression

Management expects Keller to match or exceed forecast construction output growth of c 5% per year to 2030, supported by infrastructure, energy transition and data centre investment. The identified, unsecured pipeline is typically 2–2.5x the order book, excluding I-40, providing opportunities to replenish contracted work. Management attributed the improvement in profitability to portfolio optimisation, commercial discipline, stronger project controls and fewer loss-making contracts. These supported its assessment of c 7% as a sustainable operating margin baseline. With consensus already implying margins of c 7.2% in FY26 and FY27, the framework pointed primarily to revenue growth as the driver of further operating profit progression.

Cash generation to provide capacity for M&A

Management outlined capex typically equivalent to c 3.5% of annual revenue and allocated c 40% of its £800m free cash flow ambition to dividends, leaving c 60% for bolt-on acquisitions and additional shareholder returns. This implied c £320m for dividends and c £480m for acquisitions and buybacks, with deployment dependent on available opportunities. The framework followed FY25 free cash flow of £175.9m. Keller retained a 0.5–1.5x net debt/adjusted EBITDA target range, compared with −0.2x at FY25, excluding IFRS 16, providing balance sheet capacity from a net cash position. Management is actively assessing self-funded, earnings-accretive bolt-ons to extend geographic coverage, add technical capabilities and access customers and sectors, while maintaining leverage discipline.

Scope to narrow discount to peers

Keller trades on FY26e/FY27e EV/EBITDA of 6.2x/5.9x, versus peer forward averages of 7.9x/7.4x, discounts of 22%/20%, P/E multiples of 12.9x/11.8x compared with 14.2x/12.2x and discounts of 9%/8%. Delivery against the growth and cash flow targets offered scope to narrow the discount, with disciplined M&A and buybacks providing additional potential support for EPS.

LSEG Data & Analytics at 22 October 2026

Consensus data

Year end Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) DPS (p) P/E (x) EV/EBITDA (x)
12/25 3,087.0 327.3 197.3 215.20 70.40 14.8 6.7
12/26e 3,369.0 355.9 222.6 247.54 82.50 12.9 6.2
12/27e 3,542.0 370.5 234.7 269.50 89.47 11.8 5.9

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