Stock Analysis & Valuation Carillion plc (CLLN.L)

• Previous Close: £0.14
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	49.59	34823
Intrinsic value (DCF)		n/a
Graham-Dodd Method		n/a
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Carillion plc (LSE: CLLN.L) was a leading UK-based multinational construction and support services company specializing in infrastructure development, facilities management, and energy services. Operating in the Engineering & Construction sector, Carillion provided comprehensive solutions for major buildings, large property estates, and critical infrastructure such as roads, railways, and utility networks. The company's business model integrated construction, maintenance, and financing services, positioning it as a key player in public and private sector projects. Despite its diversified service offerings, Carillion faced financial instability, ultimately leading to its liquidation in 2018. The company's legacy remains a case study in corporate governance and financial risk management within the Industrials sector.

Investment Summary

Carillion plc's financials for FY 2016 showed revenue of £4.39 billion and net income of £124.2 million, with diluted EPS at £0.26. However, weak operating cash flow (£73.3 million) and high total debt (£688.7 million) signaled underlying financial stress. The company's inability to sustain profitability and cash flow generation led to its eventual collapse, making it a high-risk investment prior to liquidation. Investors should note the risks associated with high leverage and operational inefficiencies in the construction sector.

Competitive Analysis

Carillion operated in a highly competitive Engineering & Construction industry, where scale, project execution, and financial stability were critical. The company's competitive advantage lay in its integrated service model, combining construction, facilities management, and infrastructure maintenance. However, its financial instability and high debt burden eroded its ability to compete effectively against more financially robust peers. Competitors with stronger balance sheets and diversified revenue streams outperformed Carillion in securing long-term contracts and maintaining profitability. The company's reliance on large-scale public sector projects also exposed it to political and funding risks, further weakening its market position. Post-liquidation, competitors absorbed its contracts, highlighting the sector's consolidation trends.

Major Competitors

• Balfour Beatty plc (BVS.L): Balfour Beatty is a major UK-based infrastructure group with a strong presence in construction and engineering. Unlike Carillion, Balfour Beatty maintained a more stable financial position, allowing it to secure large-scale projects. Its diversified operations in the US and UK provided resilience against regional downturns. However, the company faced challenges in project execution and profitability in some segments.
• Kier Group plc (KIE.L): Kier Group is a UK-focused construction and services company with expertise in infrastructure and property development. It benefited from Carillion's collapse by acquiring some of its contracts. Kier's strong regional presence and government contracts provided stability, but it also faced high debt levels and margin pressures in competitive bidding environments.
• Vistry Group plc (VTY.L): Vistry Group (formerly Bovis Homes) operates in the UK housing and construction sector. While not a direct competitor in infrastructure services, Vistry's focus on residential projects provided a more stable revenue stream compared to Carillion's reliance on large infrastructure contracts. Its strong balance sheet allowed for consistent growth, unlike Carillion's financial struggles.
• Ferrovial S.A. (FER.MC): Ferrovial is a global infrastructure operator with significant presence in the UK and North America. Its financial strength and diversified portfolio in toll roads, airports, and construction projects gave it a competitive edge over Carillion. Ferrovial's ability to manage large PPP (Public-Private Partnership) projects effectively contrasted with Carillion's operational and financial challenges.