DCF Studio

    IG.MI · MIL · Utilities

    Italgas S.p.A.

    Also onConsensus Drift

    Implied value per share

    EUR 33.73

    Market price

    EUR 8.45

    Implied upside

    +299.2%

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

    AdjustedCapital expenditure runs at 34.1% of revenue against depreciation of 21.4%. 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: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 33.73+299.2%
    Exit multiple
    EUR 23.55+178.7%
    Market price
    EUR 8.45

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0m485m970mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 4.1bnEUR 4.8bnEUR 5.6bnEUR 6.6bnEUR 7.7bn+17.1%
    EBITEUR 1.3bnEUR 1.5bnEUR 1.8bnEUR 2.1bnEUR 2.4bn+17.1%
    NOPATEUR 962.3mEUR 1.1bnEUR 1.3bnEUR 1.5bnEUR 1.8bn+17.1%
    Add depreciation & amortisationEUR 879.4mEUR 1.0bnEUR 1.2bnEUR 1.4bnEUR 1.7bn+17.1%
    Less capital expenditureEUR -1.4bnEUR -1.6bnEUR -1.9bnEUR -2.2bnEUR -2.6bn+17.1%
    Less increase in working capitalEUR 73.0mEUR 85.5mEUR 100.2mEUR 117.3mEUR 137.5m-17.1%
    Free cashflow to firmEUR 515.2mEUR 603.5mEUR 706.9mEUR 828.0mEUR 969.9m+17.1%
    Discount factor0.97230.91910.86880.82130.7764-
    Present valueEUR 500.9mEUR 554.6mEUR 614.2mEUR 680.1mEUR 753.1m+10.7%
    Present Value Of The ForecastEUR 3.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.782Reported 0.675, pulled toward 1.0 (Blume)
    Cost of equity9.28%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 8.6bn43.0% of capital
    Total debtEUR 11.4bn57.0% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC5.79%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 33.73

    93% of EV

    Forecast FCFF, final year
    EUR 969.9m
    Capex at depreciation, working capital in reinvestment
    EUR 2.9bn
    Less reinvestment at g/ROIC (40.9% of NOPAT)
    EUR -1.2bn
    Capitalised
    EUR 1.7bn
    ROIC (reported)
    6.1%
    Terminal value, undiscounted
    EUR 54.2bn
    Terminal value, discounted
    EUR 42.1bn
    Enterprise value
    EUR 45.2bn
    Less net debt
    EUR 10.9bn
    Equity value
    EUR 34.3bn

    Exit at 10.0x EBITDA

    Value per shareEUR 23.55

    91% of EV

    Terminal value, undiscounted
    EUR 40.9bn
    Terminal value, discounted
    EUR 31.7bn
    Enterprise value
    EUR 34.8bn
    Less net debt
    EUR 10.9bn
    Equity value
    EUR 23.9bn

    Spread between methods: 36%.

    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%
    3.79%74.5186.57107.85155.96371.85
    4.79%47.0550.1554.5461.2873.10
    5.79%32.4633.0333.7334.6235.80
    6.79%24.4424.5924.7524.9125.07
    7.79%19.0719.2019.3419.4719.60

    Outlined: this model. Green text: above today's price of 8.45. 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 year17.1%-1.2%-18.4pp
    EBIT margin31.2%6.0%-25.3pp
    Discount rate5.8%11.2%+5.4pp
    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.