Costain Group - wins more business, shares 196p, TP 297p

Mark Watson-Mitchell
4 days ago
2 min read

Mark Watson-Mitchell - 18.03.2026

This morning Costain Group (LON:COST), the infrastructure company, has announced yet another contract win for its already record Order Book.

It has secured a new contract valued at approximately £45m with Severn Trent to undertake critical infrastructure upgrades at the Rugby Newbold Sewage Treatment Works, with work scheduled to continue until 2028.

As the principal contractor and designer, Costain will focus on constructing new facilities and enhancing existing systems to improve operational resilience and increase the site's capacity.

This award extends Costain's long-standing partnership with Severn Trent, which began in 2010 and has spanned multiple regulatory cycles, reinforcing Costain's track record in delivering essential infrastructure solutions.

Management Comment

CEO Alex Vaughan stated that:

"This new contract continues our long-term trusted partnership with Severn Trent built on delivering essential infrastructure upgrades that make the UK's water system more resilient.

This award is testament to our excellent track record of identifying construction efficiencies and delivering predictable, best-in-class solutions that maximise value for Severn Trent and its customers."

Broker's View

Upon this news, analyst Max Hayes, at Cavendish Capital Markets, stated that:

"Despite a strong share price run of +80% over the past 12-months, we see meaningful valuation upside remaining; a blended EV/EBIT of 5.7x across all forecast years does not fully reflect the revenue potential underpinned by Costain's £7.0bn order book and recent margin progression."

Hayes has a Target Price set on the group's shares at 297p.

My View

The value in Costain is not reflected in its current share price, currently just 196p, after having touched 202p upon this morning's corporate news.

They are going higher!