DCF Studio

    ANZ.AX · ASX · Financial Services

    ANZ Group Holdings Limited

    Also onConsensus Drift

    Implied value per share

    AUD 27.55

    Market price

    AUD 37.68

    Implied upside

    -26.9%

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

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    Wrong toolThis line has no market capitalisation, which means it is not ordinary shares - typically a hybrid, preference line, note or unlisted stub. A discounted cashflow values a claim on the whole business, so applying it here attributes all of the group’s revenue to a security that has no such claim. Its value is its coupon and call schedule. Look up the ordinary line instead.
    AdjustedReported capital expenditure averages just 0.00% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 4.82% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    AUD 27.55-26.9%
    Exit multiple
    AUD 9.91-73.7%
    Market price
    AUD 37.68

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0bn4bn8bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayAUD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueAUD 23.5bnAUD 24.8bnAUD 26.2bnAUD 27.6bnAUD 29.1bn+5.5%
    EBITAUD 11.1bnAUD 11.7bnAUD 12.3bnAUD 13.0bnAUD 13.7bn+5.5%
    NOPATAUD 7.8bnAUD 8.2bnAUD 8.7bnAUD 9.1bnAUD 9.6bn+5.5%
    Add depreciation & amortisationAUD 1.1bnAUD 1.2bnAUD 1.3bnAUD 1.3bnAUD 1.4bn+5.5%
    Less capital expenditureAUD -1.1bnAUD -1.2bnAUD -1.3bnAUD -1.3bnAUD -1.4bn+5.5%
    Less increase in working capitalAUD -1.2bnAUD -1.3bnAUD -1.4bnAUD -1.4bnAUD -1.5bn+5.5%
    Free cashflow to firmAUD 6.6bnAUD 6.9bnAUD 7.3bnAUD 7.7bnAUD 8.1bn+5.5%
    Discount factor0.97510.92720.88170.83840.7972-
    Present valueAUD 6.4bnAUD 6.4bnAUD 6.4bnAUD 6.5bnAUD 6.5bn+0.3%
    Present Value Of The ForecastAUD 32.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.35%Australian Government 10-year (RBA F2)
    Equity risk premium6.00%Market assumption
    Beta0.711Reported 0.569, pulled toward 1.0 (Blume)
    Cost of equity9.62%Risk-free + beta x equity risk premium
    Cost of debt7.35%Implied cost of debt of 21.6% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationAUD 0.000.0% of capital
    Total debtAUD 219.8bn100.0% of capital, book value as a proxy
    Tax rate29.7%Effective, capped at statutory
    WACC5.17%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 shareAUD 27.55

    83% of EV

    Forecast FCFF, final year
    AUD 8.1bn
    Capex at depreciation, working capital in reinvestment
    AUD 9.6bn
    Less reinvestment at g/ROIC (48.4% of NOPAT)
    AUD -4.7bn
    Capitalised
    AUD 5.0bn
    ROIC (WACC floor)
    5.2%
    Terminal value, undiscounted
    AUD 191.3bn
    Terminal value, discounted
    AUD 152.5bn
    Enterprise value
    AUD 184.7bn
    Less net debt
    AUD 97.1bn
    Equity value
    AUD 87.6bn

    Exit at 8.0x EBITDA

    Value per shareAUD 9.91

    75% of EV

    Terminal value, undiscounted
    AUD 121.0bn
    Terminal value, discounted
    AUD 96.4bn
    Enterprise value
    AUD 128.6bn
    Less net debt
    AUD 97.1bn
    Equity value
    AUD 31.5bn

    Spread between methods: 94%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.17%64.5764.9965.41143.32—
    4.17%41.3141.6141.9242.2242.52
    5.17%27.0827.3127.5527.7828.02
    6.17%17.4817.6717.8618.0518.23
    7.17%10.5810.7310.8911.0411.20

    Outlined: this model. Green text: above today's price of 37.68. 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 year5.5%9.7%+4.2pp
    EBIT margin47.1%55.0%+8.0pp
    Discount rate5.2%4.4%-0.7pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

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