Severn Trent ODIs and Efficiency driving earnings upgrades (FY26 First Take)

Research evidence excerpt

Severn Trent ODIs and Efficiency driving earnings upgrades (FY26 First Take)

C A Z E N O V E Europe Equity Research

20 May 2026

Severn Trent Neutral

SVT.L, SVT LN

ODIs and Efficiency driving earnings upgrades (FY26 Price (19 May 26):3,012p

First Take) Price Target (Mar-28):3,225p

Our Take: We see this as a strong set of results with underlying EPS ~4% of European Utilities & Clean Energy

ACexpectations for FY26 and a guidance upgrade to FY28 driven by a mix of stronger Pavan Mahbubani, CFA

Outcome Delivery Incentive (ODI) outperformance in FY26 (which will be (44-20) 7134-3056

recognised as revenue in FY28) as well as higher visibility on operational pavan.mahbubani@jpmorgan.com

efficiency. We expect the focus of the conference call today to be the drivers of the J.P. Morgan Securities plc

ODI outperformance/opex efficiency vs guidance a year ago, as well as a Javier Garrido

discussion around the quantum of reopeners. (34-91) 516-1557

javier.x.garrido@jpmorgan.com

• Noteworthy Areas: SVT noted that it had submitted proposals to Ofwat of J.P. Morgan Securities plc

£600m for the first of three rounds of re-openers, which we expect is fully Samanvitha Theegela

funded, and does not see a big uplift to its growth profile given it had a higher (91-22) 6157-5846

samanvitha.theegela@jpmchase.com

baseline for AMP8. FY26 ODI reward £73m (vs expected reward of £40m). J.P. Morgan India Private Limited

The company invested £1.9bn in FY26 and delivered 17.2% RoRE (vs ~13% Mukund Verma

expected). We view the £300m ODI guidance to FY30 as conservative given (44-20) 7742-4181

the back-end loaded profile and SVT achieved £73m in the first year. mukund.verma@jpmorgan.com

J.P. Morgan Securities plc

• Outlook & Guidance: SVT upgraded its 2028 adjusted EPS outlook to at least