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    AI.PA · PAR · Basic Materials

    L'Air Liquide S.A.

    Also onConsensus Drift

    Implied value per share

    EUR 66.08

    Market price

    EUR 163.16

    Implied upside

    -59.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 12.6% of revenue against depreciation of 9.0%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: EUR assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 66.08-59.5%
    Exit multiple
    EUR 113.29-30.6%
    Market price
    EUR 163.16

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 26.0bnEUR 25.1bnEUR 24.2bnEUR 23.4bnEUR 22.6bn-3.5%
    EBITEUR 4.8bnEUR 4.6bnEUR 4.4bnEUR 4.3bnEUR 4.1bn-3.5%
    NOPATEUR 3.6bnEUR 3.5bnEUR 3.3bnEUR 3.2bnEUR 3.1bn-3.5%
    Add depreciation & amortisationEUR 2.3bnEUR 2.3bnEUR 2.2bnEUR 2.1bnEUR 2.0bn-3.5%
    Less capital expenditureEUR -3.3bnEUR -3.2bnEUR -3.1bnEUR -3.0bnEUR -2.9bn-3.5%
    Less increase in working capitalEUR -262.3mEUR -253.3mEUR -244.5mEUR -236.1mEUR -227.9m-3.5%
    Free cashflow to firmEUR 2.4bnEUR 2.3bnEUR 2.2bnEUR 2.1bnEUR 2.1bn-3.5%
    Discount factor0.96610.90160.84140.78530.7329-
    Present valueEUR 2.3bnEUR 2.1bnEUR 1.9bnEUR 1.7bnEUR 1.5bn-9.9%
    Present Value Of The ForecastEUR 9.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.20%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta0.761Reported 0.644, pulled toward 1.0 (Blume)
    Cost of equity7.77%Risk-free + beta x equity risk premium
    Cost of debt3.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 104.1bn88.5% of capital
    Total debtEUR 13.6bn11.5% of capital, book value as a proxy
    Tax rate24.6%Effective, capped at statutory
    WACC7.15%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareEUR 66.08

    80% of EV

    Forecast FCFF, final year
    EUR 2.1bn
    Capex at depreciation, working capital in reinvestment
    EUR 3.2bn
    Less reinvestment at g/ROIC (24.4% of NOPAT)
    EUR -774.1m
    Capitalised
    EUR 2.4bn
    ROIC (reported)
    10.3%
    Terminal value, undiscounted
    EUR 52.9bn
    Terminal value, discounted
    EUR 38.8bn
    Enterprise value
    EUR 48.2bn
    Less net debt
    EUR 10.0bn
    Equity value
    EUR 38.2bn

    Exit at 14.6x EBITDA

    Value per shareEUR 113.29

    88% of EV

    Terminal value, undiscounted
    EUR 90.2bn
    Terminal value, discounted
    EUR 66.1bn
    Enterprise value
    EUR 75.5bn
    Less net debt
    EUR 10.0bn
    Equity value
    EUR 65.6bn

    Spread between methods: 53%.

    Sensitivity

    Value per share (EUR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.15%103.68113.85127.77148.08180.56
    6.15%77.5782.3988.4796.42107.29
    7.15%60.7263.1666.0869.6574.15
    8.15%48.9750.2051.6253.2755.25
    9.15%40.3040.8841.5142.2243.03

    Outlined: this model. Green text: above today's price of 163.16. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-3.5%12.4%+15.9pp
    EBIT margin18.3%37.9%+19.6pp
    Discount rate7.2%4.6%-2.5pp
    Download as Excel

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    Yahoo Finance and RBA data. General information, not advice. Methodology.