| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 105.41 | -72 |
| Intrinsic value (DCF) | 82.80 | -78 |
| Graham-Dodd Method | 1.82 | -100 |
| Graham Formula | n/a |
Capita plc (LSE: CPI) is a leading UK-based provider of consulting, digital, and software solutions, serving both public and private sector clients globally. Operating through its Public Service, Experience, and Portfolio divisions, Capita delivers a broad range of services, including customer experience transformation, HR solutions, pension administration, IT services, and specialized consulting for sectors like healthcare, defense, and utilities. Founded in 1984 and headquartered in London, Capita has evolved into a key player in business process outsourcing (BPO) and digital transformation. The company’s expertise spans finance, procurement, education, and workforce management, making it a critical partner for organizations seeking efficiency and innovation. Despite financial challenges, Capita remains a significant force in the UK’s industrial and public service sectors, leveraging technology and automation to drive long-term value.
Capita plc presents a mixed investment case. On one hand, its diversified service offerings and strong public sector contracts provide stable revenue streams. However, the company’s negative operating cash flow (-£25.2M in the latest period) and high debt (£680.3M) raise concerns about financial sustainability. The lack of dividends and a beta of 1.347 indicate higher volatility compared to the market. While Capita’s focus on digital transformation and automation could drive future growth, execution risks and competitive pressures in the BPO sector remain key challenges. Investors should weigh its turnaround potential against liquidity risks.
Capita operates in the highly competitive business services sector, where differentiation is critical. Its strengths lie in deep public sector relationships and a broad service portfolio, including niche areas like pension administration and digital policing. However, the company faces intense competition from global BPO giants and tech-focused consultancies. Capita’s financial constraints limit its ability to invest aggressively in innovation compared to well-capitalized rivals. Its competitive advantage stems from UK market expertise, but this also creates geographic concentration risk. The company’s shift toward higher-margin digital services is a positive, but slower adoption of automation compared to peers like Accenture or Infosys could hinder long-term positioning. Cost pressures and contract profitability remain key hurdles in maintaining competitiveness.